Rare earths miner Lynas (LYC) seems to be looking slightly healthier.
Its 2014-15 statutory annual report, released yesterday, shows high sales, lower losses, but a rise in debt, and more cash on hand at the end of the financial year. The shares fell 2.6% to 3.7 cents in yesterday’s bloodbath on the ASX.
Lynas reported a net loss of a still substantial $118 million for the year to June 30, down sharply on the massive $345.4 million loss in the previous year.
Lynas said it had made cost cuts of over $40 million a year, helping the business report positive cash flow in the fourth quarter.
“The company continues to work to achieve further reductions in the cost of production,” directors said in the report.
Despite the market continuing to be oversupplied, Lynas said it was looking to develop additional sales opportunities.
LYC 1Y – Lynas sees "extremely low prices for rare earths products"
The company held total debt of $662 million at the end of June, up from $550 million a year ago.
Revenue in the period more than doubled to $144.6 million, from $64.57 million a year earlier, as it increased sales in a depressed global marketplace.
The board said issues affecting the business included the "extremely low prices for rare earths products experienced in the first quarter of fiscal 2016 and the possibility that these low prices could continue through fiscal 2016".
The company said it was continuing to pursue improvements in its cost performance and had recently announced a restructuring of its debt facilities.
Lynas mines rare earth metals are used in many high-tech products, with operations in Western Australia and a refinery in Malaysia.
Rare earths prices have tumbled over the past two years as supply has increased and high-tech product users have become more efficient, finding alternative sources to deal with China’s stranglehold on world production.
The struggling miner has been forced to carry out a review of its operations and cut expenses, including by way of closing its Sydney operations, reducing its workforce, making changes to its debt agreements and renegotiating supplier contracts.
US rival MolyCorp is running down production at its American mine, so perhaps the outlook for Lynas might improve as it will become the only rare earths producer outside China.
