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Lynas Corporation

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Lynas Corporation Ltd, along with its subsidiaries, is focused on the investigation and development of deposits of Rare Earth and additional mineral resources in Asia and Australia. Lynas has developed a strategy to create a fully integrated and reliable supply from the mines to their customers. Their goal is to become the benchmark for environmental standards and supply security in the world-wide Rare Earths industry with their Zero Harm and Sustainable Development strategic plans.

Lynas has operations in both Australia and Asia. A list of the company’s subsidiaries includes:

• Lynas Chemet Australia Proprietary Limited
• Mt. Weld Holdings Proprietary Limited
• Lynas Malaysia Sendirian Berhad (Malay equivalent to incorporated)
• Mt. Weld Rare Earths Proprietary Limited
• Mt. Weld Niobium Proprietary Limited
• Mt. Weld Mining Proprietary Limited.

Currently Lynas Corp owns the richest deposit of rare earths in the world, located at Mt. Weld. Mt. Weld is 35 kilometers south of Laverton in Western Australia. All of the required Australian approvals for project development have been obtained and a feasibility study on the Rare Earths deposit has been completed.

Originally, Lynas Corp's proposed process plant for Mt. Weld ore was to be located in China. In recent years, a trend in Chinese Government policies has appeared which is leading to an increase in Government control of the Chinese Rare Earths industry and a tightening of the supply caused by the reduction and restrictions on trading existing export quota and the implementation of mining production quotas. This has resulted in 1) a removal of VAT rebates for exports of Rare Earth oxides and 2) the Chinese government imposing an increased enforcement of their tough environmental standards (all non-compliant Rare Earth plants have been shut down).

Lynas, not long after production quotas were announced, came to the conclusion that it was necessary for the company’s future to research suitable alternative sites for the proposed processing plant for ore from Mt. Weld that were outside of China. The main reasons behind this decision were:

• Alternative countries had a more favorable tax environment
• The increase in project risk for the plant due to increasing Governmental control of the Chinese Rare Earths industry
• An opportunity to benefit from a strengthening Chinese currency because the cost base designated in Renminbi will be reduced by a change in location
• The rising costs of operating in China due to the Chinese Government policy changes mentioned above, as well as cost of reagents, utilities and labor being affected by inflation.

To make the change possible, the first stage was to relocate the concentration plant back to Mt. Weld from China. Developing an Advanced Materials Plant to process the concentrate was the next phase.

A detailed evaluation was made of several potential sites. In the end, Kuantan in Pahang, Malaysia was chosen. The benefits to building the proposed plant in Kuantan were:

• The high quality workforce
• A favorable investment climate
• Reagents used by the Plant being readily available
• The first-class infrastructure which services the proposed site.

The Malaysian Industrial Development Association (MIDA) has granted Lynas Corp "strategic pioneer status." Among the number of benefits that are associated with this status is a 12 year tax free period. After receiving the required municipal and environmental approvals from the authorities in Malaysia, Lynas has begun construction in the Gebeng Industrial Area of Kuantan where the Advanced Materials Plant will be located.

The earnings results of Lynas Corp Ltd for the period which ended June 30, 2010 are as follows (all of these figures are in Australian dollars):

• Total Outflow: 28.3 million
• Total Inflow: 15.8 million
• CAPEX – Advanced Materials Plant in Malaysia: 19.4 million
• CAPEX – Concentration Plant in Mt. Weld: 2.2 million
• The CAPEX incurred costs for the second quarter were lower than originally estimated by approximately:
  • 2.8 million for payments against operating costs
  • 5.2 million for CAPEX.
• Third Quarter Forecast
  • Payments against operating costs: 9.6 million
  • CAPEX: 41.9 million.