Lynas Rare Earths' Malaysia plant posts record output, shares rise 5%

AUSTRALIA's Lynas Rare Earths Ltd's third-quarter revenue plunged nearly 28% due to lower prices, the firm said on Friday, but investors took heart from record output of neodymium-praseodymium (NdPr) from its Malaysia plant.

Shares of the Perth-based rare earths producer rose as much 5.4% to A$6.88, the biggest intraday gain since Jan. 30.

While the company's total rare earth oxide (REO) production volume fell due to a supplier shortage of a key processing agent - hydrochloric acid - the miner's neodymium-praseodymium (NdPr) output for the quarter rose 2.3%.

NdPr production was 1,725 tonnes in the March quarter, above last year's 1,687 tonnes output, and the highest ever quarterly production at its Malaysia plant.

"NdPr oxide output came in 6% higher than our forecast, which was the driver of the modest 2% beat on revenue," JPMorgan analysts said in a note.

Compared with the prior quarter, sales revenue rose 9%, boosted by NdPr demand from customers outside China.

The Malaysian facility is facing uncertainty over its future as domestic regulators raise concerns about radiation levels from the process of cracking and leaching.

The company said it was planning for a potential forced shutdown of the Malaysia plant from July 1 and transitioning to using mixed rare earth carbonate produced at Kalgoorlie in Australia as the feedstock for downstream processing.

The Kalgoorlie facility remained on track for production to start in the current quarter, the company said.

"If Lynas can get the Kalgoorlie plant up and running when they say they can, it will be an upside turn for the company," said Henry Jennings, a senior analyst at Marcustoday Financial Newsletter.

Lynas' quarterly revenue fell to A$237.1 million ($159.85 million) from A$327.7 million a year earlier due to softening average selling prices for heavy rare earths, which fell to A$48.3 per kilogram (kg) from A$64.7 per kg last year. - Reuters