Welcome to the Lynas Rare Earths and Meteoric Resources investor and analyst briefing. Following opening remarks, there will be a Q&A session. Investors and analysts can ask live audio questions during today's call. To ask a live audio question, press the Request to Speak button at the top of the broadcast window. The broadcast will be replaced by the audio question screen. Use the dial-in number and access PIN provided to ask your question via the phone. Alternatively, for those on a home or personal network, you can ask your questions via the web by pressing Join Queue. If prompted, select Allow in the pop-up to grant access to your microphone. If you have any issues using the platform, dial-in details can also be found on the homepage under Asking Audio Questions. Press the Documents icon to see today's files and platform instructions. Select a document to open it.
You can still listen to the meeting while you read. I'll now hand over to John Humphrey, Chairman of Lynas.
Good morning, ladies and gentlemen, and thank you for joining us. I'm incredibly pleased to be here with the Chairman of Meteoric, Andrew Tunks, Meteoric's CEO, Stuart Gale, as well as my Lynas colleagues, Pol Le Roux, Sarah Leonard, Gaudenz Sturzenegger, and Daniel Havas. As you are aware, this morning we released a very exciting announcement and presentation about the proposed combination of Lynas with Meteoric. The format for today is that Andrew and I will make some opening remarks about the proposed combination, and then we'll be happy to answer questions. How will we achieve the combination? Lynas and Meteoric have entered into a binding scheme implementation deed, under which Lynas will acquire 100% of the shares in Meteoric by way of a court-approved scheme of arrangement.
The consideration is Lynas shares, with each Meteoric shareholder receiving 0.0207 Lynas shares for each Meteoric share, or approximately one Lynas share for each 50 Meteoric shares held. On a 60 day VWAP basis, that implies a 64% premium to Meteoric's 60 day VWAP. The Meteoric board has unanimously recommended the scheme in the absence of a superior proposal emerging. The scheme is subject to an independent expert concluding and continuing to conclude that the scheme is in the best interests of Meteoric shareholders. All of Meteoric's directors and its largest shareholder, Tolga Kumova, confirmed their intention to vote in favor of the scheme on the same basis. We have very deliberately chosen this asset because of the strategic flexibility and the scale it will deliver, as well as its heavy rare earth content and the quality of the work undertaken to complete the definitive feasibility study.
If the scheme proceeds, it will result in the combination of Lynas's world-class Mount Weld deposit and extensive technical know-how with Meteoric's Brazilian expertise and the Caldeira rare earth project in Minas Gerais. Caldeira is the largest known ionic rare earth clay JORC mineral resource outside of China, at 1.6 billion tons and over 2,300 PPM total rare earth oxide. Adding a new feedstock source was precisely what we told shareholders we would do under the add resource and scale pillar when we launched our Towards 2030 strategy just over 12 months ago. This acquisition delivers on that strategy. The forecast low-cost nature of Caldeira will add diversification in terms of the resource base and carries with it the potential to open up new downstream processing opportunities, supply chains, and new customers f unding.
Whilst we have a large cash balance, we have elected to make this acquisition utilizing scrip, preserving our net cash and liquidity position so that we can remain well-capitalized to build Caldeira, as well as to execute our other growth initiatives. We have also agreed to provide Meteoric with an interim funding facility so that work on the Caldeira Project continues uninterrupted through the scheme implementation period. The proposed transaction is expected to be highly accretive across a range of key metrics, including net asset value, mineral resources, and future feedstock of NdPr and DyTb. Why Brazil? Brazil holds the largest rare earth reserves outside China, and Minas Gerais is its largest mining state. We have recently visited Brazil to meet with a wide range of ministers, funding institutions, and local stakeholders.
Through this engagement with Brazil's federal and state governments, they have been clear about wanting to build a domestic rare earth industry. We are eager to work alongside them, as well as with the local municipality and the community in Poços de Caldas to do exactly that. How will we work in Brazil? In each of the jurisdictions where Lynas operates, we focus on creating local jobs and local skills. Our ambition is for Caldeira to help establish Brazil as a key player in the global rare earth supply chain. Having helped build rare earths industries in both Australia and Malaysia, we are confident of our ability to successfully do the same in Brazil. The Meteoric team. Lynas has closely followed the development of the ionic clay industry for a number of years, including having engaged with Meteoric going back several years.
We have immense respect for the Meteoric team and what they have accomplished in Brazil, and we are looking forward to working closely with that team to deliver the Caldeira Project. Minas Gerais is a world-class jurisdiction, and whilst we are alive to the challenges of entering a new jurisdiction, we are buoyed with enthusiasm about the opportunity. By unlocking this sizable and world-class resource, we will deliver significant value to Lynas shareholders, and we are excited about the opportunity to invest in Brazil's rare earth industry. Let me hand over now to Meteoric Chairman, Andrew Tunks.
Thanks, John. Good morning, everyone. It is an absolute pleasure to be here today with the Lynas team and Barrenjoey and Macquarie as well, presenting this opportunity to both sets of our shareholders. Meteoric have only had this asset for about four years. We have made remarkable progress with a very deep focus on the fundamentals of geology, resources, and metallurgy. That has all culminated in the Caldeira definitive feasibility study, which was produced at the end of July. It is an amazing milestone achieved in record time. Caldeira is a multi-decade asset with a competitive cost base, compelling economics, as outlined in our DFS. There is no doubt that we see real upside here from Lynas as the project is delivered under their stewardship. There are two reasons for the recommendation from the Meteoric board for this transaction, value today and retained exposure to Caldeira.
For our shareholders, I just want to go over those two reasons. The first is value, with the proposed transaction presenting a compelling premium to our recent trading. The second, and this is very important from my perspective, was the continued exposure to the project. We believe it is the premier rare earth project undeveloped on the planet. When you bring in Lynas' expertise, funding, customer relationships, that has the potential to unlock enormous value. For Meteoric shareholders, you will move from holding Meteoric stock, a junior middle-tier developer, to holding the only established and proven producer of separated oxides outside of China. This is an amazing opportunity. For Meteoric, as a single-asset developer, funding and execution are the risks that matter most.
Lynas' balance sheet, operating cash flow, and technical capabilities materially mitigate both those risks, and they complement a team that we are very proud to have built up over the last four years in Brazil. Today, I would super like to acknowledge that team. We have grown from two or three to a team of 70. It has been amazing. I would also like to acknowledge the underlying family who we did the deal with, the Togni family, and in particular, the community and the people of the municipality of Caldas, where our project will eventually operate.
Together, Meteoric, Caldas, the Tognis, the Minas Gerais government, we have progressed this project materially down the development path, and this transaction acknowledges the hard work and dedication of everyone at Meteoric. We absolutely look forward to being shareholders and to develop this project alongside Lynas. Thank you, John. It has been a great adventure.
Thank you, Andrew. Now I would like to ask our acting CEO, Pol Le Roux, to comment on the merger. I think you are on mute, Pol.
Technical issues.
Yeah. While we're trying to sort out the technical issues, I'd like to ask Stuart Gale to comment.
Great. Thanks very much, John. Look, I'd just like to reiterate both your words and Andrew's words. This has been a real journey over a very short period of time for the team at Meteoric. We've been very fortunate to have very strong relationships with the government in Brazil, both from a federal, state, well, three, federal, state, and municipal level. As you look at the journey that we've come on over the last four years, I don't think you'll find many jurisdictions anywhere globally that will have been able to have bought a project from early-stage drilling through to definitive feasibility study, and very shortly, to be able to receive the licenses which allow us to construct the project. That's a key for us over the next short period of time, is to get the installation license.
The team that we have on the ground have maintained very strong relationships with the environmental agencies in Minas Gerais. We're progressing strongly along those lines. We're very thankful for the opportunity to be working with Lynas because Lynas brings those key aspects to the development of the Caldeira Project once that license is up and running. I'd also just like to congratulate all technical teams. As you'd appreciate, there is a huge amount of work that goes on in the background over a period of diligence, which has been a pretty significant effort to have got through this process in what is the last five weeks or so, I suppose. We're very thankful to both sides for the work that's been done. I think it also highlights the strength of the Caldeira Project that we've been able to withstand a Lynas diligence process.
It just gives confidence in the whole process that we've put together and those fundamentals that Andrew spoke to. We're very much looking forward to closing this transaction and working with the Lynas team over the next little period of time. Thanks, John.
Thanks, Stuart. Pol, it looks like we might have resolved the technical difficulties.
Problem solved.
Yeah.
Thanks, John. I have to say, I'm in Toronto attending a Rare Earths conference, and every single people I have met in the last few minutes is congratulating us for this deal. Which means the market is very happy with the potential. We will deliver on that. I'm happy to say the whole team at Lynas is really very excited with the transaction and engaged in optimizing the integration of our businesses, be in terms of production optimization and business opportunities. Personally, I have in my previous company, for 26 years, I have worked with a lot of Brazilian colleagues. I was always impressed by the quality of their work, be in chemical processing, engineering, maintenance, and operation. I feel very confident and very excited in our ability to execute our plan smoothly and effectively, and that will make that deal fantastic. Great stuff for Lynas.
Great news.
Thanks, Pol. To summarize, Caldeira is the right asset for Lynas at the right time. Squarely consistent with our Towards 2030 strategy, and we are acquiring it using scrip to ensure that our balance sheet remains strong. I'll now hand over to the operator for questions.
Thanks, John. 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 that your microphone is live. Our first question comes from Genevieve Gillis from Barrenjoey. Genevieve, please go ahead.
Good morning, John, Andrew, Stuart, Pol, and your teams. Congratulations on the transaction. I'm just interested in how, from a Lynas perspective, how this plays into the CEO transition process. Can we get an update on the transition process and timing? And whether the process is now elongated until this potential transaction completes?
Yeah. Thank you for that question. The answer is no, that it's not elongated until the transaction completes. The selection process for a new CEO is independent of this process. The process has become prolonged for reasons which I've previously discussed, but the board is looking forward to the completion of the process in the not too distant future. We'll certainly have an announcement before the AGM in November and maybe even by late October.
Thank you.
In terms of, maybe embedded in that question is also how or why we would do a transaction in the middle of a transition process. We set out Towards 2030 strategic direction over 12 months ago. The acquisition of Meteoric, as I've said, is squarely consistent with the growth pillar of that strategy. At the time we set that strategy, Amanda Lacaze was the CEO, and Amanda was involved in pursuing that strategy, including the early discussions with Meteoric up until the 30th of June when she retired. Since that time, Amanda has stayed with us to work on this particular project. She's a strong supporter of the acquisition. I'm pleased to be able to say that our business hasn't ground to a halt just because we're in a CEO transition. We have a strategic and deep bench with talented and capable executive team.
We're grateful to Amanda for the ongoing assistance, but that talented executive team has been able to execute on the strategy and resulting in the announcement this morning.
Thank you. Our next question comes from Dim Ariyasinghe from UBS. Dim, please go ahead.
Thanks, guys. Congratulations. Maybe just one on the project itself and how you expect it to integrate into the broader Lynas business. Apologies in advance if this is a simple question, but does this volume effectively solve your heavy rare earth shortfall from a geological perspective, or do you expect incremental oxide tons from this eventually coming out of LAMP? Could you change the DFS? Do you foresee any potential changes to this project as it currently is positioned to optimize into LAMP? Likewise, is there anything you now need to do at LAMP to make way for this new feed?
Daniel, maybe I will ask you to comment in the first instance and ask Pol to add any further remarks that he might have.
Sure. Thanks, John, and thanks, Dim, for the question. I think there are multiple questions in there, Dim. First of all, from the process, your first comment around the heavies and the lights, this actually does add heavies to our resource. As you have seen in the statement, it adds about 127 tons per annum of DyTb to our resource on top of what we can already get out of Mount Weld. If you look at the outside China market today for DyTb, it is around 400 tons per annum. So between the Mount Weld feedstock and supplementing it with this excellent heavy feedstock, we are able to get a significant volume of that outside China market demand today. So we are very confident from that perspective. It does also add lights, NdPr, to our process, of course, another 4,000 tons per annum.
It positions Lynas very strongly from a development perspective, an ongoing development perspective. We'll be able to lift production up as market demand continues with great confidence now between both Mount Weld and the Meteoric Caldeira Project, both from the lights and the heavies. As far as integration goes, yes, we will be working with the Meteoric team. They've already done an excellent job, but we will work with them through the process to look at their flow sheet process and how they would develop that project, and we'll bring our expertise because we've done this multiple times, of course. We'll bring that expertise into the team, and between us, we'll be able to revisit the flow sheet and bring it in line with Lynas's production profile going forward.
Pol, is there anything you'd like to add?
Well, not much except that we've been working on ionic clay processing for several years now. The team of Meteoric and Lynas, I know we work a lot together to maximize the overall efficiency of the process from mining to end products. That's part of the synergies of this deal that we can make the overall things more efficient than initially planned. A lot to do, but a lot of potential ahead of us.
Thanks, Pol. Next question.
Thank you. Our next question comes from Chen Jiang of Bank of America. Chen, please go ahead.
Good morning. Thank you for taking my question. Congrats. Acquisition of this development project, which kind of in line with your upstream acquisition Towards 2030 strategy. Just a question, from Lynas shareholder perspective, how should we think about the downstream capacity given you have more resources and reserve now? I guess previously, the 12,000 ton per annum of NdPr as well as your DyTb capacity. That is my first question. Secondly, again, back to that project. What is the plan over the long term? Are you going to sell MRX to North American market? I guess that does not make sense if you have already have downstream in Malaysia. I guess you are going to ship the MREC from Brazil to Australia. Is there any cross-border uranium restrictions, et cetera? Are those in your DD and considerations? Thank you.
Thanks. Daniel?
Sure. From a production perspective, Chen, thanks for the question, and it is a little bit soft, but I think I got the question from you. From a production perspective, Lynas's strategy has always been to grow with the market, and we will continue to do that, particularly the outside China market. As you are already aware, we have said that we will lift production capacity downstream in Malaysia to 12,000 tons in this planning period to match what we can already produce out of Mount Weld. Having the Caldeira feedstock come online over time as we continue to ramp that up, will allow us the flexibility to continue above the 12,000 tons over time and in line with the outside China market. It provides the flexibility of feedstock options going into Malaysia.
It also allows us, over time, to assess the potential of downstream development in Brazil as well, which would be excellent from a de-risking perspective and a further growth opportunity. That would allow us to obviously look at feeding the Western Hemisphere market from Brazil and our existing supply chains from existing facilities in Malaysia. It is all about the flexibility of what we will be able to do and the ability to grow with great confidence because of the feedstock options that we have in line in the short and longer term. From a ramp-up perspective, the initial plan, obviously ionic clays produce an MREC. That MREC can, with our development program, be separated in Malaysia. That would be the initial plan going forward.
Next question.
Our next question is from Bert Donnes of William Blair. Bert, please go ahead.
Thanks, and Pol, great having lunch with you today. For my question, Lynas has one of the best track records of being able to operate in a very low-price environment and still come out okay on the other side. Obviously things look good right now from a pricing perspective. But is that something that this mine helps or hurts? I guess, should we view this deal as a way to capture upside when times are good, or is this a way to solidify stability for Lynas regardless of the environment? Does this deal change where your capital goes in the future? Are you more in Brazil versus Australia or Malaysia?
Daniel?
Sure. Thanks, Bert. Nice to hear from you there in the U.S. What this does for us, Brazil to begin with, is an excellent jurisdiction. Minas Gerais particularly has great infrastructure. This is not a frontier jurisdiction. However, it does allow a low-cost opportunity to be added to the Lynas stable. As you know, as we moved into higher-cost jurisdictions, we are always very conscious of our cost muscle, which has always been really important and critical to our success. That strategy has not changed, and Brazil offers the ability for us to continue down that pathway, and bring in additional low-cost feedstock from the ionic clay and the high quality of the ionic clay in the Caldeira Project, as well as what we can already produce at low cost out of Mount Weld through our Malaysian facilities.
That strategy remains in place, and we've got a great deal of confidence that Brazil presents that opportunity to add that low-cost production, and feedstock at the moment. From a capital perspective, nothing has changed from our capital allocation perspective from the Towards 2030 strategy. That will continue as is today. Which includes, as I've just mentioned, going up to the 12,000 tonnes production capacity in Malaysia. We will allocate capital over time according to where it is best used. We have a very strong balance sheet, as you're aware, and the way we have structured this deal protects that balance sheet and gives us the optionality to place capital into projects that are at the right time, in the right place, and certainly Brazil will allow us to do that.
The DFS from Meteoric's process already presents about $500 million to get that moving. We have the flexibility to be able to run that through our own balance sheet today, as well as additional project financing. The Brazilian government's development bank have shown a great interest in being involved in this project. They would then have skin in the game from a country perspective, which is really important going forward. So, great deal of flexibility and the ability to process both in downstream in Brazil as well as in Malaysia at a low cost, and that's really important for us.
Next question.
Thank you. Our next question comes from Austin Yun of Macquarie. Austin, please go ahead.
Yeah. Morning, team. Yeah, really good to see that you are executing the Towards 2030 strategy at a pace, I mean, from Lynas shareholder perspective. My question is, given that you increase your resource base, expanding your downstream, and also expansion of your offering of the product, you tick all the three buckets already, and now this transaction really deconstrain your MREC supply once the project is built. I am now just looking at your Kalgoorlie plant facility, which has been running at a lower utilization rate. Is there a possibility there for you to even shut that plant, given that you can find a different source to feed your downstream solvent extraction plant in Malaysia? Thank you.
Daniel, do you want to comment initially, and then I will ask Pol to add his comment.
Sure. I think, Austin, as I was just talking about, the additional feedstock provides flexibility into the business as part of our growth strategy. It makes us a much stronger company by having that additional feedstock available to us over time. So not just in the short term, but in the long term as well as a business. As far as Kalgoorlie goes and what we do with Kalgoorlie is an integral part of our operations today. We have been working very closely there to work out when we will lift production capacity. The technical teams there have a great deal of confidence now in their ability to do that over time. We have run through many of the bottlenecks in that facility.
I'm not going to comment anything around what we may do with it in the future, but it remains an integral part of what we're doing today. From an MREC perspective, I think we've always mentioned in the past that there are customers who are interested in the MREC that we produce out of Kalgoorlie, and certainly what we can produce in the future from this opportunity. We need to make a strategic decision as a business. Do we want to sell MREC and help potential competitors get going? That's a decision for the business as we move forward, but certainly there is demand from that perspective for the business if we chose to go down that pathway.
Thanks, Daniel. Pol, is there anything you'd like to add?
Yeah, simple. Kalgoorlie is part of the supply chain from Mount Weld. It's fair to say that we are not yet fully done in Kalgoorlie. But we'll get there, and we'll get there pretty fast. Mount Weld remains our primary source of raw material, and so we will execute Kalgoorlie, and I have some more ideas in the future to make Kalgoorlie a fantastic factory. It's not one or the other. This deal is on top of Mount Weld resource. There is no questions about, I get that, and therefore I shut down Kalgoorlie. Kalgoorlie is part of our processing of Mount Weld, and we'll get there, and we'll pretty get there very nicely sometime soon.
This is additional resource, and all of this is contributing to our growth Towards 2030, where basically, we want to at least double the size of our business, so we need everything.
Thanks, Pol. Next question.
Our next question comes from Sam Berridge of Perennial. Sam, please go ahead.
Good day, guys. I just wanted to follow on from Genevieve's question. Being that you've got a CEO transition period, who owns this decision if it turns out that the Meteoric resource doesn't quite perform up to its DFS numbers? Who's responsible for this?
The responsibility sits with the acting CEO at this stage, and the board.
Yeah. Fair enough.
We thought about how we would go about this and were satisfied that our structures, even though Amanda had stood down, were sufficient. But the decision is owned by the executive team, of whom Pol Le Roux is the leader, and it is owned by the board.
We made the decision because we believe we can do it or even better.
We've stress-tested it as best we could, but in our judgment, it simply wasn't feasible to wait for the new CEO to be appointed and then to try and look at undertaking the acquisition. The opportunity may well have gone away.
Our next question is from Ben Bailey of Harvest Lane Asset Management. Ben, please go ahead.
Hi, guys. Firstly, congratulations on the deal. Looks to be a win-win all around based on what's been mentioned here today on the call. I just had a question specifically to the SID and process. I think you guys have listed a Brazilian change of control as one of the conditions precedent. I just wanted to get a sense of any understanding you might have as to whether that will be applicable ultimately to the scheme, and if so, what your expectations as to what it might look like.
Daniel, do you want to comment on that? Then maybe I'll ask Sarah if she's got anything she would like to add.
Sure. Thanks, Ben, for the question. I think you're referring to the approvals process that we will go through. In Brazil, they have introduced new legislation in critical minerals, which they believe is very positive for the country's development, and we will go through that legislation as they implement it. Our view is that they will take some time to go through the process to get it up and running. We have engaged with the Brazilian government already, and we have confidence that that legislation will present a smooth pathway through the process. We will need a change of control approval by the Brazilian government. Given there is an election there at the moment, that will take a little bit of time, but we have allowed for that in the process and in the scheme arrangements. So we're pretty confident with the process as we move it forward.
Moving on. Our next question is from John Schultz of Argonaut. John, please go ahead.
Hi, all. I'm just querying how you think about Lynas' footprint and how it will evolve in the future. Is this downstream in Brazil to complement what you have there? Are you thinking other ore sources in other locations for downstream, potentially thinking of getting that hook into the North American market? Just thinking of the longer-term strategy here.
Sure. Daniel?
Yep. If we look at the 2030 strategy where we have said that we would add resource, that strategy continues, and this is a big part of that strategy. But it does not preclude us and it won't stop us continuing the other elements of that particular part of the 2030 strategy. That includes continued development of Mount Weld's ore body, including the carbonatite development, and looking at where we can access the heavies through mine planning, which we're very aware of. We continue to be interested in ionic clay deposits in Malaysia itself. It makes sense for us to be involved in the development of those projects, and we've been clear with the Malaysian government that we will continue to assist them with that.
It makes sense for us politically, and it makes sense if we can get feedstock from close by the Malaysian facility within the country. So that strategy has not continued from a footprint perspective as far as developing our upstream assets. What this does, again, it de-risks the business continually, which is always good for Lynas, and it also allows us to have flexibility in our footprint development over time. Now, we have said, as I've said earlier on this call already, that we will investigate the options of continued development in Brazil and what that looks like, but we need to go through that process. There is nothing set in stone, and we'll have something more to say on that in due course.
But for the moment, what this does is allows us to continue developing the upstream part of the 2030 strategy, and therefore, we can look at the flexibility and how we put flow sheets through that allow us to continue lifting production in line with outside China demand. We have a great deal of confidence in where demand is heading outside China. The world has moved and shifted as far as where they want their materials to come from, and Lynas stands to benefit from that. This opportunity allows us to continue that flexibility from a where we are and jurisdictionally. It will put us on the map in Australia, in Malaysia, and now in South America, and then we will be able to feed our customer demand through those various opportunities.
John
Can I just add a point, Daniel?
Yeah.
John, Stuart here. I might also just add that the Brazilian government has been very constructive and very positive towards the process that we've just engaged on. That's both at a government level and also from the development bank perspective. Brazil is all about the development not only of their resource base, but also of industrialization. That's one of the beauties about this transaction, is that it brings a company such as Lynas with a proven track record of producing and industrializing the rare earths industry into the country. That's something that's very appealing from a government perspective. From the discussions that we've had in Brazil with all those parties, they're very happy to support a process of looking at other ways of industrialization. Very clearly, we need to go through a process. We need to understand what all of that entails.
But the government are there to support that process, which I think is an important part of this transaction also.
Thanks, Stuart. Next question.
Our next question is from Genevieve Gillis of Barrenjoey. Genevieve, please go ahead.
Hi, everyone. Thanks for taking my second question. I am just wanting to understand, if you could please flesh out the key aspects of the Meteoric Resources opportunity, and why you chose it versus other potential acquisition targets within Brazil.
Yeah. Daniel?
Sure. This is a high grade, high value asset in an excellent jurisdiction. The Caldeira itself is recognized as being high grade and presents great opportunity for us overall. It will double our mineral resource. It is at a fraction of the market cap of Lynas today. So it is very good value for the business itself. The team, the Meteoric team, have done an excellent job to de-risk the project, which has always been something Lynas has been interested in. Many have asked us previously, "Well, why don't you go into early stage development?" That has not been part of our strategy. So having the DFS in place already, having the relationships with government, having the relationships with the local stakeholders as well, has been a really important part of our discussions with the Meteoric team.
That has also given us a great deal of confidence that this is the right project for us to go after. Obviously, we have been successful in finding that agreement with them.
Yeah. Andrew Tunks?
Genevieve, just a little bit about the Meteoric Resources, which as a geo I'm pretty familiar with, having been part of that development. If you look at global ionic clays, they range typically in that 800-1,500 PPM TREO. The Caldeira, not just our part, but the Caldeira in general is unique, and it is a very high grade, incredibly large resource. We're at 1.6 billion tons, having explored around 20% of the ground that we hold. So there's enormous upside there. The grade distribution is fundamentally different than any other ionic clay that's really well documented anywhere on the planet. That's a classic geology thing. There's always something on the right-hand side of the bell curve. So in that sense, it's amazing.
I think there's some fundamental things about the geology of the Caldeira itself, the collapse of the volcano, which has both increased the grade through a continual upgrading during weathering and production of the clays, but has also preserved the truly ionic nature of the deposit. If you look at the older, it's quite young, it's only 70 million years old. If you look at the older ionic clays, because rare earths are very mobile in the weathering environment, they're washed out. So there's a whole range of things that I think make this an exceptional project. Then to cap that off, and this was what Meteoric were always focused in on ourselves, is that like any other geological deposit, they are extremely heterogeneous, right? There's always high grade parts, low grade parts, thicker parts of clay.
We have the jewel in the crown as it is known at the moment. It is part of the project in the deep south of the Caldeira, at the southern end of the volcano in the city of Caldas. When I say city, I mean in the area of Caldas. It's certainly not a city. One of the reasons we chose that area was its remoteness from human habitation. We affect one house, one built house in the whole development. So it's remote. It is exceptionally high grade at around 4,000 PPM. Its recoveries are off the chart. We're not affecting any communities. That was where Meteoric always planned to start. This is the oxide cap on a porphyry copper deposit. It's the high grade part of Kalgoorlie. This is the jewel of the larger volcanic system.
It gives an amazing start to the project. Then you would expand out, and we know how to explore this thing now. Meteoric have developed an enormous amount of technical expertise. We have drilled three times more than anyone else in the Caldeira. We have developed more data. We have worked more closely with ANSTO. We have run our pilot plant for a very long time now. So we feel that we have delivered something that is technically very high quality here. Having said that, what Lynas bring is the processing expertise, the balance sheet, all the things that Meteoric as an explorer were missing. So I see this as an amazing synergy. But the resource, it is absolutely world-class in the ionic space.
I would just add, Genevieve, we have got over 150 million tons worth of reserves, so that covers the entirety of the DFS life. We are 20% explored, so those reserves are only going to grow. You are just going to get more and more certainty associated with the ore body as we do more and more work on it. We have got a great team to do that.
Genevieve, just to add to that, I think, if you needed a headline on the top of your report this morning, it would be that this transaction brings together one of the world's best hard rock deposits, being Mount Weld, and one of the best ionic clay deposits, being the Caldeira. Simple.
Yeah. Go straight for the best, Daniel.
Best of both worlds, mate.
Okay. Fair enough.
I think the short answer to Genevieve Gillis's question is that we view Caldeira as the premier rare earth development asset. It is really that simple, on a range of different metrics. Next question.
Our next question comes from Chen Jiang of Bank of America. Chen, please go ahead.
Thank you for taking my follow-up question. I know it is part of Lynas strategy, again, from Lynas perspective, to get into upstream, high grade, heavy, rare earth reserve and content like this project. You are already long on MREC, combining Kalgoorlie plants and Malaysia. You already have Kalgoorlie produces MREC. So if I think about Kalgoorlie from Australia, Brazil, LAMP, Malaysia, maybe let me know what is the difference between the plant you are going to build in Brazil versus the plant in Kalgoorlie? You will end up very long in MREC if you do not increase your NdPr long-term capacity. Thank you.
Daniel.
Yeah, sure. And sorry, Chen, you are very faint, but I think I got the question again. As I said earlier, what this does is create enormous flexibility and optionality in the Lynas business for how we feed our facilities and how we continue to grow and how we give confidence to the market that we have the feedstock to be able to service the outside China market today. Part of the challenge in the outside China market in purchasing ex-China separated rare earths is their ability to feel confident that they can get access to the material over the long term. This transaction allows us the additional flexibility and security of supply from having two high-grade resources being able to feed our facilities in whatever form we decide to separate them, whether that be in Malaysia, whether it be in Malaysia and Brazil, and that is to be determined.
But the optionality is there. This gives us the security of continued supply in the short term and definitely in the long term, to be able to supply the Western demand for many, many years to come.
Thanks, Daniel. Next question.
Our next question comes from Dim Ariyasinghe from UBS. Dim, please go ahead.
Thanks. Thank you. Thanks for the follow-up. Just a question, and apologies if I've missed this, on the Togni offtake. What are the implications of that now with this transaction, please?
Daniel.
Yeah. The Togni family, we've spent a considerable amount of time with them. John has spent time with them in two countries so far. And obviously the Meteoric team has spent a number of years with them. They are a really well-respected family, both locally and in the state itself. They're an important element and important relationship for us to have long-term. They are in the process at the moment through this transaction. The tenements will be handed over to the Meteoric team, or the Meteoric team as it will be with Lynas. They are the land holder, but the transfer of the resources rights will come across to our team. We've got confidence in the family. They've been part of the process. They have very strong business assets already in separate businesses in the Caldeira. And they're an important part of the transaction and the conversation.
And certainly from a relationship perspective, we built a very good relationship with them in a short period of time. But the Meteoric team have built a really good relationship over a longer period of time. But it is a royalty stream for them. They are not involved in the day-to-day business.
Next question.
Thank you. And our last question today comes from Dylan Kelly of Terra Capital. Dylan, please go ahead.
Sorry, folks, final one from myself. I am still confused as to how MEI's flow sheet is going to fit into the rest of the business, or whether it is Kalgoorlie, Malaysia, the combination of such. What are we to assume about the current configuration? I get that you want to have lots of options, and options are great, but I am failing to understand the detail here about what it is going to take to suddenly handle clay into what is an existing monazite treatment plant. At the SX levels, where is this going to fit in? If you cannot answer the questions about how this is going to work, when will you be able to tell us exactly how this is going to? Surely, obviously, you are limited in terms of what you can say.
When is it going to be after the deal is closed when you can disclose the workings of this? Because right now, it is very hard to gauge.
Yeah. Daniel?
Yep. We have already tested the Meteoric material through our flow sheet, Dylan. That work has been done as part of the diligence process that we have been through. Yes, you are right. We have more work to do to optimize the flow sheet and ensure that that material can be fed through the system. But the testing shows no challenges to date, and we are confident that we will be able to feed it through. Now, I know I have talked about optionality already, but we will do that process and continue the discussions with Meteoric, and from a technical perspective, with our experts in Malaysia, who will become involved in the process more deeply now. We will have more to say on that as we work through that.
We are saying here post-deal closure, we will get some sort of clarity as to where this is going to go, confirm that the flow sheet for MEI stands as it is, and it simply falls into one of the SX trains in Malaysia. Is that a base case we should be assuming here?
Sure, I do not think that is unreasonable. We said that it would take six months to close the deal through the process, so that is not an unreasonable timeframe. But we have to work through the process.
Dylan
Looking forward to
If you want a lesson on processing, I am happy to give it to you. It is a no-brainer. We are processing MRX as much as we can today, and we can do that and explain you that any time. It is
I look forward to hearing the details and having a follow-up over Chardonnay, Pol. That would be great.
You know my email.
Yes.
As there are no further questions, I will now hand back to John for closing remarks.
I would just like to reiterate what I said in my introductory remarks, and that is that Caldeira is the right asset for Lynas at the right time, squarely consistent with our Towards 2030 strategy. We believe it is the best rare earth asset for us to pursue. It creates strategic flexibility, and we are delighted that we have been able to reach agreement with Meteoric on this transaction. We believe that it will be highly value accretive, and we look forward to sharing further information with the market and shareholders when we are in a position to do so. Thank you.
That concludes today's call. Thank you for joining us. You may now log out.