Updates Tuesday from two companies who have been having a fine time of it lately, and while the good news continued for Lynas Rare Earths, Pilbara Minerals ran into some unexpected headwinds.
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The renewables boom continues to deliver for rare earths miner and processor Lynas (ASX: LYC) which saw a trebling in quarterly revenue in the three months to March from the first quarter of 2021.
The outstanding performance came as the company rode a boom in demand for its rare earths and higher prices.
Lynas said in its quarterly report that revenue rose to nearly $328 million in the three months from $110 million in the March quarter of 2021.
Revenue was also up more than 60% from the three months to December, 2021 and confirms analysts’ forecasts for a record 12 months for Lynas when it rules off its books on June 30.
The surge in revenue came as the price for neodymium-praseodymium (NdPr) continued to rise in the quarter.
A year ago Lynas said the domestic price for NdPr oxides in China was $US68.1 ($A91.8) a kilogram. That jumped to $US100 ($A134.8)/kg in the December, 2021 quarter before climbing to $US145.4 ($A196)/kg in February.
In March, the commodity was trading at $144.2 ($A194.4)/kg or more than double what it was a year ago.
“Demand for Lynas products remained strong during the quarter, particularly for the NdPr product family in the magnet market segment,” Lynas said in its quarterly report released on Tuesday.
“Lynas continues to receive many approaches from end users seeking to secure their raw material sourcing over the longer term and is engaged in productive discussions with a number of these end users.”
The strong rise in prices was amplified by an equally strong rise in production at Lynas’ Mt Weld project in Western Australia and its Malaysia processing plant. The company said 1,687 tonnes of NdPr were produced during the quarter – a record number and 19% more than the December quarter, but more importantly, up more than 24% from the 1,359 tonnes in the same quarter of 2021.
Lynas said it produced more than 600 tonnes of NdPr in March alone – the highest monthly NdPr production figure since the beginning of the COVID-19 pandemic.
Lynas said it consciously prioritised Mt Weld debottlenecking initiatives during the quarter to maximise production to Malaysia. This included supplementing commercial shipments with charter vessels to transport concentrate from Fremantle Port to Malaysia amid global shipping delays.
The company also prioritised preventative maintenance during the quarter and built inventories of critical chemicals and reagents to minimise supply risks.
Lynas said its cash and securities on hand rose to $768 million at March 31 from $568 million a year ago.
Naturally, amid all the good news, investors sold Lynas shares yesterday. They ended the session down 1.4% at $9.69.
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Meanwhile it was a similar but different story for Pilbara Minerals (ASX: PLS) which in an early March quarter update, revealed problems with labour shortages in its WA spodumene business.
Pilbara’s news was different – a clear operational weakness in the March quarter even though guidance was met.
The similarities were the way Investors, alert to any news event that mentions lithium or spodumene, reacted sending the shares down 5.8% on the day to $2.90.
The good news was that the company’s Pilgangoora mine achieved production of 81,431 dry metric tonnes (dmt) of spodumene concentrate in the March quarter which the company said was “in line with management’s previous guidance of 75,000 to 90,000 dmt.”
But there was a feeling from the brief report (the full quarterly will be out April 28) that spodumene production could have been higher.
Pilbara Minerals revealed production had been impacted by the rising instance of community transmission of Covid in WA which had seen a fall in availability of staff and contractors.
And with COVID-19 expected to continue affecting operations through the June quarter, the company is uncertain regarding production forecasts with operational delays and lower output, hence the sell off.
Despite these fears, Pilbara Minerals has maintained its annualised 2021-22 guidance of 340,000 to 380,000 dmt of spodumene.
But this could be at the lower end of the target range if COVID-19 persists.
Shipments for the March quarter totalled 58,383 dmt down from the December quarter’s figure of 78,679 dmt.
The fall was due to a port delay whereby 20,000 dmt had been scheduled to be shipped in late March but was delayed and eventually sailed on April 7.
On prices the company said it achieved an average realised sales price of roughly $US2,650/dmt. This is within the previous guidance of $US2,600-$US3000/dmt, inclusive of a December quarter sale that was shipped in the March quarter.
Some investors were looking for higher price results and Pilbara said it would further pricing guidance in its April 28 report.
