More annual reports from Lynas Rare Earths:
2023 Report2022
Annual Report
Contents
FY22 Highlights
Letter from the Chairman
CEO Review
Our Operations
Living our Values
Board of Directors
Senior Management Team
Directors’ Report
Sustainability Statement
Remuneration Report – Audited
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Financial Statements
Consolidated Statement of Profit or
Loss and Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
1
2
4
7
7
8
8
9
33
34
53
54
55
61
62
63
64
65
66
Mineral Resources and Ore Reserves
107
Additional Information
110
Corporate Directory
Back Cover
Lynas Rare Earths acknowledges the Traditional
Owners of the lands on which we live and work,
across Australia.
We acknowledge and value Lynas’ Aboriginal
and Torres Strait Islander employees, partners
and communities and pay respect to their
Elders past and present.
www.LynasRareEarths.com
Contents
FY22 Highlights
$541m
$920m
Record
Profit
Record
Sales Revenue
$966m
Cash and
Short Term Deposits
$186m
Property, Plant &
Equipment Capital
Spend
911
Employees
24%
Women
Senior Executives
400+
LTI free days achieved
at Mt Weld site
External
accreditations
maintained
11
Lynas Rare Earths Limited | 2022 Annual Report Letter from the Chairman
Dear Shareholder, it is my pleasure to present the 2022 Annual Report.
The 2022 financial year was an excellent year for the rare earths market.
Lynas, as an ethical and environmentally responsible producer was well
positioned to flourish in this environment. The capability and customer
relationships built over the past decade provided the foundation for our
excellent results.
I am pleased to report that Lynas achieved sales revenue of $920 million and
Net Profit After Tax (NPAT) of $540.8 million. It is a credit to the Lynas team
that they were able to overcome a number of challenges during the year to
achieve these record results.
Production continued to be affected by the consequences of the ongoing
COVID-19 pandemic. Team members were required to isolate and
pandemic-related shipping and logistics delays required new solutions.
Ongoing water supply disruptions in Malaysia offered significant challenges
to our Malaysian production team. Despite these challenges, an 8% increase
of NdPr production year on year was achieved.
Rare earths market prices and demand for NdFeB magnets remained
robust throughout the 2022 year. As a leading supplier of rare earth
materials, Lynas experienced strong demand for its NdPr product family
and mixed Heavy Rare Earth compound (known as SEG) and this was a key
contributor to the excellent results.
Good progress was made on the company’s Lynas 2025 growth plan
which is aimed at increasing capacity and diversification of the company’s
industrial footprint. Full approvals for construction of the Kalgoorlie Rare
Earths Processing Facility were received in February 2022 and construction
works at the end of FY22 were over 40% complete.
Plans for the company’s expansion to the United States also progressed
during the year. In June 2022, Lynas was awarded an approximately US$120
million follow on contract from the U.S. Department of Defense (DoD) for
construction of a commercial U.S. based Heavy Rare Earths separation
facility. The facility is expected to be co-located with Lynas’ planned Light
Rare Earth separation facility (announced January 2021) which will be
partially funded by the DoD.
As the world seeks to transition to cleaner energy sources, demand for rare
earth materials for electric vehicles and wind energy has accelerated. In
keeping with our objective of growing with the market, Lynas is making
further investments to increase capacity in each stage of our operations.
Subsequent to FY22, in August 2022, Lynas announced an approximately
$500m capacity expansion project at the Mt Weld mine and concentration
plant with the aim of further increasing feedstock capacity in addition to
implementing sustainability and circular economy initiatives.
“ As the world
seeks to
transition to
cleaner energy
sources, demand
for rare earth
materials for
electric vehicles
and wind energy
has accelerated.
”
22
www.LynasRareEarths.com Strong market prices and demand for Lynas’ products further strengthened
our balance sheet during the year and closing cash was $965.6m. This
provides a strong platform for our growth projects, including the Mt Weld
expansion plans which will be fully funded from cash flow.
Rare earths are used in attractive and future facing industries and Lynas
occupies a unique position in the global Rare Earths market. The Board
recognises that we operate in a highly competitive market and the skills of
our team are in demand in the rare earths and other minerals processing
industries. The Board continued to assess the external environment in line
with talent acquisition and retention strategies during the year.
From a remuneration perspective, this means ensuring that overall
remuneration continues to reflect balanced and fair outcomes in the current
market. A review of the Lynas STI and LTI Plans was conducted to ensure
they remained comparable with peer group companies.
Lynas remains focused on meeting customer, community and investor
needs for ethically and responsibly produced rare earths. The company
continues to develop initiatives to enhance Lynas’ climate change resilience
and environmental, social and governance (ESG) performance and reporting
and it is pleasing to see that these continued improvements were well
received by the market in FY22.
Accelerated demand for rare earth materials, Lynas’ unique market position,
and progress on Lynas 2025 growth plans underpinned a significant uplift in
market capitalisation during the year.
On behalf of the Board, I would like to take this opportunity to thank Amanda
Lacaze, her executive team, and all Lynas employees for their continued hard
work and effective execution of the company’s growth plans.
The Board would also like to thank you, our shareholders, for your ongoing
support of the business. It was very pleasing to see Lynas realise the benefits
of over a decade of hard work as the rare earths market strengthened this
year and the Board remains focused on continuing to build shareholder
value as we accelerate capacity to meet growing demand.
Kathleen Conlon
Chairman
33
Lynas Rare Earths Limited | 2022 Annual Report CEO Review
The 2022 financial year was another record
year for Lynas. The record revenue and profit
achieved in 2022 was the reward for many years
of hard work and heavy lifting by the teams in
both Australia and Malaysia.
It is very pleasing to be in the position we are in today, as the market
continues to grow. Demand for magnets, particularly for wind turbines and
electric vehicles, has been robust in 2022, with forecast growth expected
to accelerate faster than many in the industry originally expected. This
increase in demand was accompanied by a significant increase in pricing
for the magnetic rare earth products.
The favourable market conditions, sustained demand for Lynas’ rare earth
materials, and continuing process enhancements underpinned our record
results despite continued challenges in the external environment.
This success allows us to confidently progress our growth initiatives in line
with the accelerating market.
Mitigating internal and external challenges
External challenges continued as the industry dealt with COVID-19 related
shipping delays, disruptions to the availability of key production inputs, and
increases to various cost categories over the past 12 months. In response,
the team added charter ships, in addition to our regular commercial ships,
to transport rare earth concentrate from Fremantle Port to Kuantan Port,
minimising the impact of port and shipment delays. Transit time for our
concentrate reached a high of over 30 days during December 2021, and the
inclusion of the charter ships ensured continuity of supply to our customers.
Water supply in Malaysia provided challenges and during the year the team
implemented several process modifications to minimise our sensitivity to its
unpredictability. To deal with the frequent interruptions to supply, solutions
included additional process water storage on site and use of other natural
local water sources, to minimise future impact on production.
During the year construction commenced on the Malaysian permanent
disposal facility (PDF) for WLP residue and the Malaysian Operating
Licence was updated to include a Class G licence for WLP disposal
activities to the PDF.
In September 2021, COVID-19 cases in the Kuantan area increased and
several personnel were required to isolate resulting in a partial or full
shutdown of the cracking and leaching plant for 11 days. The production
of NdPr was prioritised with available personnel during the period, which
meant that production of non-NdPr products was also shutdown for
16 days.
“ We are proud
that Mt Weld has
been nominated
for the prestigious
Golden Gecko
environmental
excellence award,
part of the 2022
Resources Sector
Awards for
Excellence ... ”
4
www.LynasRareEarths.com Ensuring the health and safety of our people
The safety of our people, our communities and the environment is always our first priority. The risk of COVID-19 was
prevalent in Malaysia and Australia during the year, therefore our well-established health and hygiene protocols were
maintained in both locations to protect the health and wellbeing of our people and communities. This included
surveillance Rapid Antigen testing, communication and education, disclosure and reporting, hygiene and required
isolation procedures.
The whole Lynas team maintained its focus on safety and group-wide safety results were sustained in 2022, with
the 12-month rolling lost time injury frequency rate as at 30 June 2022 at 0.8 per million hours worked (June 2021:
0.8 per million hours worked). In addition, the 12-month total recordable injury frequency rate at 30 June 2022 was
2.4 per million hours worked (June 2021: 2.1 per million hours worked). I am very pleased to report that on 27 April
2022, the Mt Weld operation achieved the milestone of one-year LTI free, an achievement that is still held following
the end of the financial year.
Producing environmentally responsible rare earths
In FY22, NdPr production was 5,880 tonnes (FY21: 5,461 tonnes) and total REO production was 15,970 tonnes (FY21:
15,761 tonnes). We remained focused on delivering production at nameplate capacity rates for NdPr, and the team in
Malaysia achieved 600t of NdPr in March 2022, the highest monthly NdPr production since the COVID-19 pandemic.
We are proud that Mt Weld has been nominated for the prestigious Golden Gecko environmental excellence award,
part of the 2022 Resources Sector Awards for Excellence administered by the WA Department of Mines, Industry
Regulation and Safety. This recognises excellence in the management of our tailings, including the implementation
of Accelerated Mechanical Consolidation at Mt Weld. This has resulted in a 50 per cent reduction in tailings volume
required to be stored, an increase in the shear strength to over 30KPa, and 70 per cent water recovery in that part
of our operations. The Mt Weld tailings initiative is one of only six WA initiatives to have been shortlisted for the
environmental award.
In September 2021, as part of our commitment to sustainability, the Lynas Greenhouse Gas (GHG) Policy was
introduced and we made a commitment to the Science Based Targets initiative (SBTi). In June 2022, Lynas received
an upgraded MSCI ESG rating from “A rating” to a “AA rating”, the second highest score.
Serving high growth customer markets
The rare earths market was strong throughout FY22, with prices for rare earths materials increasing throughout the
year. The NdPr market price remained 70% to 80% higher than in the same period last year, with the average China
domestic price of NdPr (VAT excluded) increasing from US$64.7/kg in June 2021 to US$124.0/kg in June 2022.
We continue to be approached by end users who are seeking to secure long term sourcing of raw material, and
we are engaged in productive discussions with end users for supply of rare earth materials. The NdFeB market
continued to record robust growth, despite many downstream industries dealing with a reduced workforce due
to the COVID-19 pandemic and the global shortage of semi-conductors during the year. The market growth
supported the strong demand for Lynas’ NdPr product family and Heavy Rare Earth compound (SEG).
Lynas has built a reputation as a reliable supplier of quality products and we are focused on developing strong
customer relationships with strategic customers, primarily outside China. We are the leading supplier of the NdPr
family of products to the Japanese market, with demand from our key customers consistently increasing over the
past few years and accelerating in the past 12 months.
5
Lynas Rare Earths Limited | 2022 Annual Report CEO Review
Expanding our industrial footprint
The Lynas growth plan will enable us to grow with the market, diversify our industrial footprint, and increase the range
of products we can offer our customers. It has been very exciting to see all the progress made on these initiatives.
The new Rare Earths Processing Facility in Kalgoorlie is a foundation project of the Lynas growth plan and in
FY22 all necessary approvals for the Kalgoorlie project were received. In addition, 100% of equipment was ordered
and construction works were over 40% complete at the end of the period. Key personnel in the Operational and
Maintenance Leadership teams were also recruited and commenced work during the year.
In keeping with the objective of having downstream processing close to our customers, we were pleased to be
awarded a US$120m contract by the U.S. Department of Defense for construction of a commercial Heavy Rare Earths
separation facility in the United States (announced 14 June 2022). The Heavy Rare Earths facility will be co-located
with the Light Rare Earth separation facility (announced 22 January 2021) which is sponsored and half funded by the
U.S. Government. We are completing detailed planning for the Facility, which is expected to be located within an
existing industrial area on the Gulf Coast of the State of Texas and targeted to be operational in 2025.
Planning for accelerated market demand
To support the Lynas 2025 growth plan, we are planning to accelerate capacity growth at the Mt Weld site and at
each production stage. On 3 August 2022, we announced an approximately $500m project to expand capacity at
the Mt Weld mine and concentration plant beyond the previously announced 10,500 tonnes per annum of NdPr
finished product. The expansion is designed to produce sufficient concentrate feedstock to support the production
of 12,000 tonnes per annum of finished NdPr oxide. The project has been fully scoped and the investment for this
stage of the project will be fully funded from cash flow.
In addition, an industrial plan has been developed for the Lynas Malaysia plant for expenditure of capital over
the next two to three years to support asset integrity, improve reliability and support improved environmental
outcomes on site. These include works at the plant to receive and process Mixed Rare Earth Carbonate (MREC)
from the Kalgoorlie facility and initiatives to increase capacity to 10,500tpa NdPr products, and repurpose existing
equipment to expand the range of products we offer to our customers.
Building on our performance
It has been a successful year for the company and we achieved a record result in a growing rare earths market.
The team implemented solutions to mitigate the challenges experienced in the external environment to ensure
that we continued to serve our customers.
Solid progress has been made on our Lynas 2025 growth plans and the inclusion of new projects to deliver
additional capacity increases provides the foundation for continued growth and support of our position as a
supplier of choice to 2025 and beyond.
Once again, the teams in Australia and Malaysia have put in a big effort to minimise the impact of COVID-19 on
the business, their colleagues and our local communities. I would like to thank them for all their hard work and
commitment during the year. I would also like to thank the Board for their ongoing support and counsel throughout
the year.
Lastly, but certainly not least, I would like to thank all our Lynas shareholders for your continued commitment to the
business. It has been great to share the outcomes achieved in FY22 with you and I look forward to updating you on
the progress of our exciting expansion plans in the next financial year.
Amanda Lacaze
Managing Director and Chief Executive Officer
6
www.LynasRareEarths.com Our Operations
Living our Values
Care
Achievement
Expertise
Diversity
Sustainability
We care for and respect
each other, our
communities and the
environment. We make
sure we all go home safe
and well.
We are resilient and
committed. We
overcome challenges to
achieve our goals.
We are driven to be the
world’s best in Rare
Earths and to earn the
respect of our
customers.
We are a multicultural
company. We value and
embrace diversity.
We are passionate about
contributing to a
sustainable future and
green technologies.
Lynas Rare Earths Limited | 2022 Annual Report
7
Lynas Malaysia: Integrated Rare Earths refinery in Gebeng, Malaysia.MALAYSIAMt Weld, WA: Tier 1 Rare Earths deposit, Concentration PlantAUSTRALIAUNITED STATESPlanned U.S. Heavy Rare Earths and Light Rare Earths Processing FacilitiesKalgoorlie, WA: Rare Earths Processing Facility under construction BOARD OF DIRECTORS
Kathleen Conlon
Chairman
Amanda Lacaze
Managing Director & CEO
Philippe Etienne
Non-Executive Director
Dr Vanessa Guthrie AO
Non-Executive Director
John Humphrey
Non-Executive Director
Grant Murdoch
Non-Executive Director
SENIOR MANAGEMENT TEAM
Amanda Lacaze
Managing Director
& CEO
Mimi Afzan Afza
Vice President
People & Culture
Dato Sri Mashal
Ahmad
Vice President
Malaysia
Daniel Havas
Vice President
Strategy & Investor
Relations
Chris Jenney
Executive General
Manager, Business
Development
Sarah Leonard
General Counsel &
Company Secretary
Pol Le Roux
Vice President
Downstream
Jennifer Parker
Vice President
Corporate Affairs
Gaudenz
Sturzenegger
Chief Financial Officer
8
www.LynasRareEarths.com Directors’ Report
The Board of Directors (the “Board” or the “Directors”) of Lynas Rare Earths
Limited (the “Company”) and its subsidiaries (together referred to as the
“Group”) submit their report for the year ended 30 June 2022. In order to
comply with the provisions of the Corporations Act 2001, the Directors
report as follows:
CORPORATE INFORMATION
Lynas Rare Earths Limited is limited by shares and is incorporated and domiciled in Australia. The Group’s corporate
structure is as follows:
Lynas Rare Earths Limited
ACN 009 066 648
ABN 27 009 066 648
Date of Incorporation 23/5/1983
Registered in WA
0.01%
100%
Lynas Services
Pty Ltd
ACN 31 103 936 232
Date of Incorporation
3/3/2003
Registered in
Victoria
100%
Mt Weld
Holdings
Pty Ltd
ACN 75 073 998 106
Date of Incorporation
15/5/1996
Registered in
WA
100%
100%
100%
100%
Lynas Kalgoorlie
Pty Ltd
Lynas USA
LLC
Lynas Malaysia
Sdn Bhd
ACN 73 053 160 302
Date of Incorporation
29/7/1991
Registered in
NSW
Date of Incorporation
24/6/2019
Registered in
Delaware, USA
Malaysian Company No
200601032530
Date of Incorporation
6/11/2006
Registered in
Malaysia
Lynas Africa
Holdings
Pty Ltd
ACN 148 189 511
Date of Incorporation
13/1/2011
Registered in
Victoria
100%
Mt Weld Mining
Pty Ltd
ABN 96 053 160 400
Date of Incorporation
29/7/1991
Registered in
NSW
99.99%
Lynas Africa
Limited
Malawi Company No
8409
Date of Incorporation
12/7/2007
Registered in
Malawi
9
Lynas Rare Earths Limited | 2022 Annual Report DIRECTORS
The names and details of the Company’s Directors who were in office during or since the end of the financial year
are as set out below. All Directors were in office for this entire period unless otherwise stated.
Kathleen Conlon BA (Econ) (Dist.), MBA, FAICD
Non-Executive Chair
Ms Conlon was appointed as a Non-Executive Director from 1 November 2011. Ms Conlon is currently a
Non-Executive Director of Aristocrat Leisure Limited and BlueScope Steel Limited and is a former Non-Executive
Director of REA Group Limited, CSR Limited and The Benevolent Society. She is also a member of Chief Executive
Women, former President of the NSW division of the Australian Institute of Company Directors and a former
member of the National Board of the Australian Institute of Company Directors. Ms Conlon was previously
Chairperson of the audit committee of the Commonwealth Department of Health. Prior to her Non-Executive
Director career, Ms Conlon spent 20 years in professional consulting where she successfully assisted companies
to achieve increased shareholder returns through strategic and operational improvements in a diverse range of
industries.
Ms Conlon is one of the pre-eminent thought leaders in the area of operations and change management, both
in Australia and globally. In 2003, Ms Conlon was awarded the Commonwealth Centenary medal for services to
business leadership.
Ms Conlon is a member of the Nomination, Remuneration and Community Committee and the Health, Safety and
Environment Committee.
Amanda Lacaze BA, MAICD
Managing Director
Ms Lacaze was appointed as Managing Director and Chief Executive Officer of the Company on 25 June 2014
following her appointment as a Non-Executive Director of the Company on 1 January 2014.
Ms Lacaze brings more than 25 years of senior operational experience to Lynas, including as Chief Executive Officer
of Commander Communications, Executive Chairman of Orion Telecommunications and Chief Executive Officer of
AOL|7. Prior to that, Ms Lacaze was Managing Director of Marketing at Telstra and held various business manage-
ment roles at ICI Australia (now Orica and Incitec Pivot). Ms Lacaze’s early experience was in consumer goods with
Nestle.
Ms Lacaze is a member of Chief Executive Women and the Australian Institute of Company Directors. She was a
Non-Executive Director of ING Bank Australia until 30 May 2021. Ms Lacaze holds a Bachelor of Arts Degree from
the University of Queensland and postgraduate Diploma in Marketing from the Australian Graduate School of
Management.
Philippe Etienne MBA, BSc (Phys) (Pharm)
Non-Executive Director
Mr Etienne joined the Company as a Non-Executive Director on 1 January 2015. He is a Non-Executive Director of
Cleanaway Waste Management Limited and Aristocrat Leisure Limited. Mr Etienne is also a former Non-Executive
Director of Sedgman Limited and the former Managing Director and Chief Executive Officer of Innovia Security
Pty Ltd.
Previously, he was the Chief Executive Officer of Orica Mining Services and was a member of Orica Limited’s
Executive Committee.
Mr Etienne is a graduate of the Australian Institute of Company Directors. His career includes senior executive
positions with Orica in Australia, the USA and Germany including strategy and planning and responsibility for
synergy delivery of large scale acquisitions.
Mr Etienne is the Chair of the Health, Safety and Environment Committee and a member of the Audit, Risk and
ESG Committee.
10
www.LynasRareEarths.comDirectors’ Report Dr Vanessa Guthrie AO, Hon DSc, PhD, BSc (Hons)
Non-Executive Director
Dr Guthrie was appointed as a Non-Executive Director on 1 October 2020. Dr Guthrie has qualifications in geology,
environment, law and business management including a PhD in Geology and over 30 years’ experience in the
resources sector.
Dr Guthrie is currently a Non-Executive Director of Santos Limited, Tronox Holdings PLC and Cricket Australia,
a Lead Independent Director and Deputy Chair of Adbri Limited, and Pro-Chancellor of Curtin University.
Dr Guthrie was formerly the Deputy Chair of the WACA and a non-Executive Director of the Australian Broadcasting
Corporation, and holds and Honorary Doctor of Science from Curtin University in sustainability, innovation and
policy leadership in the resources industry. Dr Guthrie is a Fellow of the Australian Institute of Company Directors,
the Academy of Technological Sciences and Engineering and the Australasian Institute of Mining and Metallurgy
and a Member of Chief Executive Women. Dr Guthrie was appointed an Officer of the Order of Australia in 2021 for
contribution to the minerals and resources sector.
Dr Guthrie is a member of the Nomination, Remuneration and Community Committee and the Health, Safety and
Environment Committee.
John Humphrey LLB
Non-Executive Director
Mr Humphrey joined the Company as a Non-Executive Director on 15 May 2017. His key areas of expertise include
mergers and acquisitions, corporate finance and corporate governance.
Mr Humphrey is a senior consultant to King & Wood Mallesons. He was the Dean of the Faculty of Law at
Queensland University of Technology from January 2013 until June 2019. He was a Senior Partner at King & Wood
Mallesons between 1998 and 2012 and a Partner at Corrs Chambers Westgarth between 1980 and 1998. He is an
experienced Non-Executive Director having previously been Chairman and a Non-Executive Director of Spotless
Group Holdings until 31 January 2021 and Chairman and Non-Executive Director of Auswide Bank Limited (formerly
Wide Bay Australia Limited) until 31 December 2020. He was appointed as Chairman and a Non-Executive Director
of Titles Queensland in August 2021 and he has previously served as Chairman and Non-Executive Director of
Horizon Oil Limited and Villa World Limited, Deputy Chairman of King & Wood Mallesons and as a Non-Executive
Director of Cromwell Property Group, Downer Group Limited, and Sunshine Broadcasting Group Limited. He has
also served as a member of the Australian Takeovers Panel.
Mr Humphrey is the Chair of the Nomination, Remuneration and Community Committee and a member of the
Audit, Risk and ESG Committee.
Grant Murdoch M COM (Hons), FAICD, FCA
Non-Executive Director
Mr Murdoch joined the Company as a Non-Executive Director on 30 October 2017. Mr Murdoch has more than
38 years of chartered accounting experience. From 2004 to 2011, Mr Murdoch led the corporate finance team for
Ernst & Young Queensland and was an audit and corporate finance partner with Deloitte from 1980 to 2000. Mr
Murdoch has extensive experience in providing advice in relation to mergers, acquisitions, takeovers, corporate
restructures, share issues, pre-acquisition pricing due diligence advice, expert reports for capital raisings and initial
public offerings.
Mr Murdoch is currently a Non-Executive Director and chair of the audit committee of the listed entity OFX Ltd and
Auswide Bank Ltd (from 1 January 2021). He was previously a director and the chair of the audit committee for ALS
Limited, Redbubble Limited and QIC. He is a senator of the University of Queensland (as well as chair of the risk
committee and member of the finance committee), an adjunct professor at the University of Queensland Business
School and a director of UQ Holdings Limited. Mr Murdoch has a Master’s degree in Commerce (Honours) from the
University of Canterbury, New Zealand, is a graduate of the Kellogg Advanced Executive Program and the Advanced
Leadership Program at Northwestern University. He is a fellow of both the Institute of Chartered Accountants in
Australia and New Zealand and of the Australian Institute of Company Directors.
Mr Murdoch is the Chair of the Audit, Risk and ESG Committee and a member of the Nomination, Remuneration
and Community Committee.
11
Lynas Rare Earths Limited | 2022 Annual Report Resignations
There have been no resignations from the Board during the period.
COMPANY SECRETARIES
Sarah Leonard
Ms Leonard is an experienced General Counsel and a leading resources and infrastructure lawyer. She was previ-
ously the Group Legal Counsel at Monadelphous Group Limited, an ASX listed contractor in the resources sector.
In that role, she was responsible for governance, compliance and regulatory matters in relation to the Group. Prior
to her role as Group Legal Counsel, Sarah was a partner at Corrs Chambers Westgarth in the construction and
infrastructure team.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Information about the remuneration of key management personnel is set out in the remuneration report of this
Directors’ Report. The term ‘key management personnel’ refers to those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, directly or indirectly, including any Director of the
Company.
DIRECTORS SHAREHOLDINGS
As at the date of this report, the Directors’ shareholdings are consistent with the shareholdings table described in
Section I(i) of the remuneration report.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The principal activities of the Group are:
Integrated extraction and processing of Rare Earth minerals, primarily in Australia and Malaysia; and
•
• Development of Rare Earth deposits.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Except as disclosed in the review of operations, the factors and business risks that affect future performance and
the subsequent events, there have been no significant changes in the state of affairs of the Group during the
current financial year.
PERFORMANCE REVIEW
The Directors together with Management monitor the Group’s overall performance including development and
implementation of the strategic plan and the operating and financial performance of the Group.
REVIEW OF OPERATIONS
Financial Highlights
The 2022 financial year was an exceptional year for Lynas as the company delivered another record profit. Market
conditions were favourable throughout the year and demand for Lynas’ rare earth materials remained strong. The
external environment continued to be challenging, due to the COVID-19 pandemic, logistics and the inflationary
environment, however, effective solutions were implemented to mitigate these challenges.
12
www.LynasRareEarths.comDirectors’ Report Sales revenue rose to $920 million, an increase of 88.1% on FY2021, and a Net Profit After Tax (NPAT) of $540.8 million
was achieved, a 244% increase on the FY2021 NPAT.
In the second half of FY2022 in particular, rare earth prices were sustained at high levels, especially the NdPr price
which remained between 70% and 80% higher than at the same time last year. The average China Domestic Price
for NdPr during the final quarter of FY2022 was US$120/kg.
Lynas began using a combination of commercial shipping and charter shipping to transport concentrate from
Fremantle to Lynas Malaysia during the year, mitigating the risk of unforeseen delays in commercial shipping
schedules. As has been reported across industry, various cost categories have seen significant increases over the
past 12 months. Royalty cost increases follow price increases in the market, freight costs were approximately double
due to global shipping cost increases and the addition of charter ships to mitigate the impact of port and shipment
delays. Chemical input costs have increased by approximately 20% with some specific chemicals seeing changes of
up to 70%.
Net Sales Revenue
Cost of Sales
Gross Profit
Net Profit Before Tax
Net Profit After Tax
FY22
$m
920.0
(348.4)
571.6
535.8
540.8
FY21
$m
489.0
(302.2)
186.8
157.5
157.1
Movement
%
88.1%
15.3%
206.0%
240.2%
244.2%
$m
431.0
(46.2)
384.8
378.3
383.7
30 June 22
$m
30 June 21
$m
Movement
$m
%
Cash and short- term deposits
965.6
680.8
Net Assets
1,645.6
1,083.4
284.8
562.2
Market Capitalisation
7,878.0
5,145.2
2,732.8
41.8%
51.9%
53.1%
Continued recognition of the rapid growth in rare earth demand, Lynas’ unique market position as the only
significant producer of separated rare earths outside of China, and improved business performance and progress
on Lynas 2025 growth plans underpinned a significant uplift in market capitalisation during the year.
Mt Weld
Lynas Rare Earths is focused on developing the Mt Weld resource to meet forecast demand growth.
Mining Campaign 4-1
Mt Weld commenced Mining Campaign 4-1 during the year and transitioned from waste mining to waste and ore
mining in the final quarter of FY22. Ore mined in this campaign is being transported to the run of mine stockpile for
future blending. Campaign 3 ores were processed in the mill during the year. Lanthanide concentrate product from
Mt Weld was shipped from Fremantle to Lynas Malaysia using both commercial and charter shipping.
Exploration Results
On 1 March 2022, Lynas announced exploration results from a single deep exploration drill hole into the fresh
carbonatite 1 kilometre below the current Mt Weld pit floor. The exploration drilling program was partially funded by
the Western Australian Government Exploration Incentive Scheme (EIS).
13
Lynas Rare Earths Limited | 2022 Annual Report Analysis of samples obtained from the exploration drill hole revealed:
• Rare Earth Element (REE) mineralisation was confirmed along the entire 1020m drillhole at an average grade
of 2.22% REO, no cut-off grade applied,
• The weathering process has significantly enriched the REE grade in the weathered saprolite zone, due to the
relative enrichment of monazite within the Apatite Zones. Apatite Zones at shallower depths show 27m of 7.6%
REO (0m to 27m depth below the current pit floor and 65 to 92m below the surface) and 23m of 13.67% REO
(42m to 62m depth below the current pit floor and 107 to 127m below the surface),
• All samples returned REE assay; the highest grade is 21.44% REO from 60m to 62.4m hosted in the apatite
zone and the lowest grade is 0.17% REO in a 4m composite sample from 969m to 973m depth hosted in
calcite-rich carbonatite. The results reveal a new exploration target in the fresh carbonatite below the surface
weathering zone that is being mined within the Life of Mine design.
Mt Weld Expansion
Subsequent to 30 June 2022, on 3 August 2022, Lynas announced an approximately $500m project to expand
capacity at the Mt Weld mine and concentration plant beyond the previously announced 10,500 tonnes per annum
of NdPr finished product. The expansion is designed to produce sufficient concentrate feedstock to support the
production of 12,000 tonnes per annum of finished NdPr oxide. The project has been fully scoped and the approxi-
mately $500m investment for this stage of the project is fully funded from cash flow. This project is based on known
technology and includes upscaled processing equipment, efficiency improvements, enhanced sustainability and
will provide a platform for further capacity increases. Two additional stages which offer a pathway to an additional
2,400 tonnes each of NdPr oxide finished product per annum are in development.
Key elements of the Mt Weld expansion project include:
• Crushing and grinding infrastructure
• Additional flotation circuits
• Apatite leach circuit
• Concentrate dewatering circuit
• Concentrate drying and load out facilities
• Reagent facilities
• A state-of-the-art high recovery water recycling circuit from the tailings dam
• Additional bore water desalination plant
• Additional tailings storage facilities, with segregated storage of process streams to enable potential future
reprocessing.
In addition to this initial expansion project, Lynas plans to implement further sustainability and circular economy
activities on the Mt Weld site, including:
• A staged transition from diesel fuelled power generation to gas and then hybrid renewable power generation
• A larger mine and waste rock landforms designed to be progressively rehabilitated
• Surface water management to capture seasonal rain events and divert into managed aquifer/ ground water
recharge that also forms flood protection infrastructure for climate change resilience.
Procurement of long lead equipment items has commenced. Subject to relevant regulatory and stakeholder
approvals, construction activities are expected to commence in early 2023, with full operation planned for 2024.
Some infrastructure will be brought online in stages to accelerate production growth prior to the completion date.
The Mt Weld capacity expansion is a brownfields project that will be carried out on the existing Mt Weld tenure.
Comprehensive environmental flora and fauna and cultural heritage surveys have already been completed on the
Mt Weld site and will support the environmental approval process.
Lynas Malaysia
Despite ongoing COVID-19, logistics and water supply challenges during the year, Malaysian operations averaged
approximately 81% of Lynas NEXT production capacity which was sufficient to meet the needs of our key customers.
14
www.LynasRareEarths.comDirectors’ Report In the March quarter, record NdPr production of 1,687 tonnes was achieved, including over 600 tonnes of NdPr
production in the month of March for the first time since the pandemic began.
An industrial plan has been developed for the Lynas Malaysia plant for expenditure of capital over the next two to
three years. The planned works include:
• ongoing works required for the Lynas Malaysia plant to receive and process the mixed rare earth carbonate
(MREC) feedstock from the Kalgoorlie Rare Earths Processing Facility (including facilities for unloading and
receiving, sulphate removal and dissolution);
•
the works required in the solvent extraction and product finishing areas to achieve the capacity uplift to 10,500
tpa NdPr finished product (as announced in the Lynas 2025 strategy in 21 May 2019);
repurposing existing equipment to expand range of products; and
•
• other efficiency initiatives.
During the year construction commenced on the Malaysian permanent disposal facility (PDF) for WLP residue and
the Malaysian Operating Licence was updated to include a Class G licence for WLP disposal activities to the PDF.
Kalgoorlie
The new Rare Earths Processing Facility in Kalgoorlie is a foundation project of the Lynas growth plan.
There was continued progress on the Facility during the year, including:
• Receipt of full approvals for construction of the Kalgoorlie Project received in February 2022, allowing
construction activities at the site to progress.
• All five kiln drum sections, the four riding rings, sixteen rollers, two main drives and auxiliary drive have been
lifted into position and assembled. The kiln was rotated under its own power during the final quarter of
FY2022.
• Work on concrete, foundations and frames for key buildings has progressed rapidly.
• Tank farm earthworks completed and blinding concrete installed.
• Waste Gas Plant foundation construction underway.
• The 20,000m3 raw water tank is complete, two 1,700m3 water treatment tanks are complete, and fabrication of
two 1,300m3 tanks are complete.
The key personnel in the Operational and Maintenance Leadership teams have been recruited and commenced
work.
Lynas USA
In keeping with the Lynas growth plan to have upstream processing close to our resource and downstream
processing close to our customers, Lynas is currently in the planning phase for our proposed U.S. Rare Earths
Separation Facility.
Lynas has now received funding grants from the United States Government for:
1. Construction of a Heavy Rare Earths separation facility in the United States
Following successful completion of the Phase 1 contract (contract announced 27 July 2020), Lynas was
awarded a follow on contract for approximately US$120 million with the U.S. Department of Defense to build
a commercial Heavy Rare Earths separation facility in the U.S (announced 14 June 2022). Following comple-
tion of the site selection process, the facility is expected to be located within an existing industrial area on the
Gulf Coast in Texas. It will house both the Heavy Rare Earths separation facility and the planned Light Rare
Earth separation facility (announced 22 January 2021).
2. Construction of a commercial Light Rare Earths separation plant in the United States
Lynas was awarded a funding contract with U.S. Department of Defense (announced 22 January 2021) for the
construction of a Light Rare Earths separation facility with funding to be capped at approximately
US$30 million and Lynas contributing a matching amount.
15
Lynas Rare Earths Limited | 2022 Annual Report Malawi deposit
Since fiscal year 2012, no further capital investment has been made on the Kangankunde Rare Earths resource
development in Malawi and the project remains on hold while the Malawi deposit remains the subject of an
ongoing title dispute. As announced on 22 January 2019, the Malawi government has purported to cancel the
Group’s Malawi mining lease and the Group has initiated judicial review proceedings in the Malawi courts chal-
lenging that decision.
Health, Safety and Environment
Lynas is committed to ensuring the Group’s operations in Australia and Malaysia are consistent with national and
international safety and sustainability best practice. Lynas has established extensive processes to ensure that our
operations are safe for employees, safe for the environment and community, and secure for our customers.
The 12-month rolling lost time injury frequency rate as at 30 June 2022 was 0.8 per million hours worked (June 2021:
0.8 per million hours worked). In addition, the 12-month total recordable injury frequency rate at 30 June 2022 was
2.4 per million hours worked (June 2021: 2.1 per million hours worked).
Lynas is proud to report that on 27 April 2022, the Mt Weld operation achieved the milestone of one year LTI free.
Lynas’ well-established health and hygiene protocols have been maintained in both Malaysia and Western Australia
to protect the health and wellbeing of our people and communities. All sites operate with COVID-19 protocols,
including surveillance Rapid Antigen testing, communication and education, disclosure and reporting, hygiene and
required isolation procedures. Protocols in Western Australia and Malaysia adhere to the respective government
directions.
The annual ISO surveillance audits were conducted at Mt Weld and Lynas Malaysia during the year and both sites
were recertified for ISO 9001:2015 (Quality Management), ISO 14001:2015 (Environmental Management) and ISO
45011:2018 (Occupational Health and Safety Management). Lynas sites have been certified since 2012. In September
2021, the AELB completed its latest audit of the Lynas Malaysia plant, which achieved a rating of “Very Satisfactory”,
which is the highest performance rating.
As part of Lynas’ commitment to sustainability, in September 2021 the Lynas Greenhouse Gas (GHG) Policy was
introduced and Lynas made a commitment to the Science Based Targets initiative (SBTi). Energy transition
initiatives and Greenhouse Gas reduction targets are in development.
In line with our commitment to international environmental best practice, detailed environmental monitoring
since the start of Lynas Malaysia’s operations in Kuantan in 2012 has consistently demonstrated that Lynas Malaysia
is compliant with regulatory requirements and international standards. Information concerning the Company’s
environmental monitoring programs, including monitoring data, is available at www.lynasrareearths.com.
FINANCIAL AND OPERATIONAL PERFORMANCE
Sales volume, revenue and costs
Sales by tonnage and value
FY22
FY21
FY20
FY19
Sales volume
Cash receipts from customers
Sales revenue
Average selling price
Cost of sales
(REOt)
(A$m)
(A$m)
(A$/kg)
(A$m)
15,263
855.0
920.0
60.3
16,405
465.4
489.0
29.8
14,172
321.8
305.1
21.5
19,154
367.5
363.5
19.0
(348.4)
(302.2)
(257.3)
(273.1)
FY22
% change
(7%)
84%
88%
102%
15%
The rare earths market remained strong throughout most of FY2022. There was a slight weakening in demand for
rare earths for NdFeB magnets inside China during the June quarter as a result of COVID-19 related lockdowns in
16
www.LynasRareEarths.comDirectors’ Report several industrial regions in China. However, market prices for rare earths were resilient, especially the NdPr price
which remained between 70% and 80% higher than a year ago.
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 end users. The NdFeB market continued to
record robust growth, despite many downstream industries dealing with a reduced workforce due to the COVID-19
pandemic and the global shortage of semi-conductors during the period. This market growth supported the strong
demand for Lynas’ NdPr product family and Heavy Rare Earth compound (SEG).
In the longer term, global demand for NdFeB magnets is forecast to grow from 130,000 tonnes of NdFeB magnets
in 2020 to 265,000 tonnes in 2030.
Market prices
The average China domestic price of NdPr (VAT excluded) increased from US$64.7/kg in June 2021 to US$124.0/kg in
June 2022. Future market price trends continue to depend on end product demand (in particular in the automotive
industry).
Lynas has developed an excellent reputation as a reliable supplier of quality products. Lynas has focused on
developing strong customer relationships with strategic customers, primarily outside China. Lynas is the leading
supplier of the NdPr family of products to the Japanese market. Demand from our key customers has consistently
increased over the past few years, with accelerated growth in the last 12 months.
Production volumes
Production volumes
FY22
FY21
FY20
FY19
FY22
% change
Ready for sale production volume total
(REOt)
Ready for sale production volume NdPr
(REOt)
15,970
5,880
15,761
5,461
14,562
4,656
19,737
5,898
1%
8%
The Lynas Malaysia plant remains focused on delivering nameplate capacity production of NdPr. This result includes
600t of NdPr produced in March 2022, the highest monthly NdPr production since the COVID-19 pandemic.
However, challenges were faced during the year, in particular:
• Water shortages due to supplier issues limited production at various stages during FY22. While the Lynas
team has implemented a number of mitigating strategies, the ongoing water shortages from our commercial
supplier resulted in several complete or partial temporary production halts during the final quarter of FY2022.
NdPr production was prioritised during this time. In response to the continued water supply difficulties, a
process modification has been designed with the objective of decreasing our fresh water consumption by
40%. This modification will be implemented during the first quarter of FY23.
• Availability of some chemical products was affected by COVID-19 related shipment delays and production
decreases, especially in China, causing shortages.
• There was a partial or full shutdown of the cracking and leaching plant for 11 days in the September quarter
due to the unavailability of personnel who were required to isolate due to an increase in COVID-19 case
numbers in the Kuantan area. This shutdown period was utilised for major maintenance programs. Product
finishing of non-NdPr products was also shutdown for 16 days as NdPr production was prioritised with
available personnel.
Despite these challenges, the team achieved an 8% increase in NdPr production year on year as the COVID-19
situation improved.
17
Lynas Rare Earths Limited | 2022 Annual Report Cash and cash flows
Net operating cash inflows
Net investing cash outflows
Net financing cash outflows
Net cash flows
Impact of foreign exchange
Cash and cash equivalents
Short term deposits
FY22
A$m
460.1
(83.6)
(13.8)
362.7
22.1
965.6
–
FY21
A$m
215.1
(138.3)
405.6
482.4
(3.3)
580.8
100.0
Operating cash flows increased significantly as a result of the strong selling price during the period. These
operating cash flows include the payment of $56m to GSSB to construct and manage the Malaysian PDF project.
Net investing cash outflows included the ongoing payments for property plant and equipment in relation to the
Kalgoorlie Rare Earths Processing Facility project as well as $100.0m of cash transferred from short term deposits.
Finance cash outflows includes US$4.0m (A$5.7m) of principal repayments made on the JARE facility in line with
the loan agreement.
Capital Expenditure
Capital expenditure is expected to be approximately $600 million in FY23 and $600 million in FY24 for sustaining
capital and major growth projects. This includes expenditure in respect of:
•
•
the completion of the Kalgoorlie Rare Earths Processing Facility;
the Mt Weld expansion project to increase concentrate feedstock to produce 12,000 tpa NdPr finished
product;
the Lynas portion in addition to USG funding for the US Light Rare Earth plant;
•
•
• works at the Lynas Malaysia plant to receive and process Mixed Rare Earth Carbonate and increase capacity to
the construction of the offsite PDF in Malaysia;
10,500 tpa NdPr finished product;
• mining development works at Mt Weld;
• sustaining capital increases due to increased plant size and preventative maintenance; and
• other ongoing operational capital expenditure across all Lynas sites.
Debt and Capital
JARE loan
Total borrowings
Financial income
Financial expenses
FY22
A$m
186.8
186.8
4.6
(9.5)
FY21
A$m
171.1
171.1
2.9
(14.9)
US$4.0m (A$5.7m) of principal repayments were made on the JARE facility. The balance increased due to the
unwinding of the discounting of the future cash outflows and the weakening of the Australian dollar against the
US dollar through the period. The financial expenses have decreased as $5.8m (FY21: $0.8m) of finance expenses
have been capitalised into the Kalgoorlie Rare Earths Processing Facility project. There have been no changes to the
interest rate on the JARE facility during the period.
18
www.LynasRareEarths.comDirectors’ Report During the year ended 30 June 2022, the Company issued shares as shown below:
Shares on issue 30 June 2021
Issue of shares pursuant to exercised performance rights
Shares on issue 30 June 2022
Performance rights
At 30 June 2022, the Company had the following options and performance rights on issue:
Performance rights
Earnings per share
For the year ended 30 June
Basic earnings per share
Diluted earnings per share
Dividends
Number
‘000
901,079
1,333
902,412
Number
‘000
3,730
FY22
Cents
per share
59.95
59.70
FY21
Cents
per share
18.08
17.99
There were no dividends declared or paid during the year ended 30 June 2022 (2021: nil) and no dividends have
been declared or paid since 30 June 2022.
Risk management
The Group takes a proactive approach to risk management. The Directors are responsible for ensuring that risks and
opportunities are identified on a timely basis and that the Group’s objectives and activities are aligned with these
risks and opportunities.
The Group believes it is crucial for Directors to be part of this process, and has established an Audit, Risk and ESG
Committee and a Health, Safety and Environment Committee.
Lynas Rare Earths has a Risk Management Policy and a Risk Management Framework for oversight and manage-
ment of material business risks.
19
Lynas Rare Earths Limited | 2022 Annual Report
FACTORS AND BUSINESS RISKS THAT AFFECT FUTURE
PERFORMANCE
Lynas operates in a changing environment and is therefore subject to factors and business risks that will affect
future performance. Lynas has a Risk Management Policy and a Risk Management Framework for oversight and
management of material business risks.
We identify risks, then evaluate the inherent risk of an activity and the mitigation required. Risk assessments are
updated by operations and management and reported to the Board of Directors.
In FY21, the Lynas Board commissioned an external risk assurance mapping exercise aligned to the Board’s risk
appetite to support decision making relating to resource and capital allocation. In FY22, a review of risk manage-
ment systems and processes was undertaken with the objective of enhancing risk based decision making.
Set out below are the principal risks and uncertainties that could have a material effect on Lynas’ future results, both
operationally and financially. It is not possible to determine the likelihood of these risks occurring with any certainty.
In the event that one or more of these risks materialise, Lynas’ reputation, strategy, business, operations, financial
condition and future performance could be materially and adversely affected. There may also be other risks that are
currently unknown or are deemed immaterial, but which may subsequently become known and/or material. These
may individually or in aggregate adversely affect Lynas.
1.
Impact of COVID-19 and general economic conditions
In light of global macroeconomic events, including the impact of COVID-19, it is likely that some of the countries
in which Lynas operates will experience an economic recession or downturn of uncertain severity and duration.
These economic disruptions could have a material adverse effect on Lynas’ operating and financial position and
performance and could affect the price of Lynas shares.
Additionally, the events relating to COVID-19 have resulted in significant market changes and volatility of supply and
demand. The outbreak and its impacts continue to evolve and outcomes are uncertain and dependent upon many
factors beyond Lynas’ control.
Many of the risks highlighted in further detail below may be heightened due to the impacts of the COVID-19
pandemic. There continues to be considerable uncertainty as to the further short- and long-term impact of
COVID-19 including in relation to governmental responses, international trade impacts, potential taxation changes,
work stoppages, lockdowns, quarantines, travel restrictions and the impact on the global economy and share
markets.
The potential effects of these possible outcomes on Lynas include:
• closure of and/or reduced capacity at Lynas’ plants and facilities;
• delays or interruption in supply chains leading to an inability to obtain raw materials, finished products or
components, or to distribute products to customers;
• health outcomes for Lynas’ employees or its customers’ employees, which could result in the closure of a
plant or facility for a period and could adversely affect the availability of technically equipped and qualified
personnel needed to conduct certain operations;
• a reduction in processing of downstream products and production of end-products that utilize Lynas’ Rare
Earths or other industrial activity, leading to a decrease in demand for Lynas’ Rare Earths;
• counterparty non-performance or claims under existing contractual arrangements;
•
• delays of projects with large associated capital spend, deferral of discretionary capital spend and impact on
insolvency of counterparties (including customers);
valuation of assets;
• disruptions to international trade resulting from policies developed by governments in response to COVID-19
or as a result of disputes or disagreements amongst governments on matters relating directly or indirectly to
COVID-19.
20
www.LynasRareEarths.comDirectors’ Report 2
2.1
Operational risks
Rare earth prices
Lynas’ revenue is affected by market fluctuations in Rare Earth prices. This is because the product prices used in the
majority of Lynas’ sales are calculated by pricing formulae that reference published pricing for various Rare Earths
materials. The market price has been volatile in the past because it is influenced by numerous factors and events
that are beyond the control of Lynas. These include:
• Supply side factors: Supply side factors are a significant influence on price volatility for Rare Earth materials.
Supply of Rare Earth materials is dominated by Chinese producers. The China Central Government regulates
production via quotas and environmental standards. Over the past few years, there has been significant
restructuring of the Chinese market in line with China Central government policy. However, periods of
restricted supply, over supply or speculative trading of Rare Earths can lead to significant fluctuations in
Rare Earth pricing.
• Demand side factors: Demand side factors are also a significant influence on price volatility for Rare Earth
materials. Demand for end-products that utilise Lynas’ Rare Earths including internal combustion vehicles,
hybrid vehicles, electric vehicles and electronic devices fluctuates due to factors including global economic
trends, regulatory developments and consumer trends.
• Geopolitical factors: Recently Rare Earths have been the focus of significant attention, including as a result
of supply chain issues highlighted by the COVID-19 pandemic.
The table below illustrates how China domestic prices of NdPr (excluding VAT) have moved over FY22:
September 2021
Quarter
December 2021
Quarter
March 2022
Quarter
June 2022
Quarter
US$/kg
80
106
139
120
Lynas’ approach to reducing pricing volatility for its customers includes:
• Promoting fixed pricing to some customers, set for periods relevant to customer operations;
• Developing long term contracts that aim to reduce price variations for end users and OEMs such as car
makers and wind turbine manufacturers.
Lynas achieved a small price premium compared to the NdPr market price, supported by:
• Sustained demand from the Japanese market and selected customers in China;
• The recognition by the market that Lynas is now well established as the only supplier of scale of separated
Rare Earths outside China;
• End users placing more importance on being able to trace the origin of rare earths from an ethical and
environmentally responsible source of production to their end products, which Lynas can provide.
Strong Rare Earth prices, as well as real or perceived disruptions in supply, may create economic incentives to
identify or create alternate technologies that ultimately could depress future long-term demand for Rare Earths.
This may, at the same time, incentivise the development of additional mining properties to produce Rare Earths.
If industries reduce their reliance on Rare Earth products, the resulting change in demand could have a material
adverse effect on Lynas’ business. In particular, if prices or demand for Rare Earths were to decline, this could impair
Lynas’ ability to obtain financing for current or additional projects and its ability to find purchasers for its products at
prices acceptable to Lynas.
It is impossible to predict future Rare Earths price movements with certainty. Any sustained low Rare Earths prices
or further declines in the price of Rare Earths, including as a result of periods of over-supply and/or speculative
trading of Rare Earths, will adversely affect Lynas’ business, results of operations and its ability to finance planned
capital expenditures, including development projects.
2.2 Market competition
Lynas Rare Earths supply contracts and profits may be adversely affected by the introduction of new mining and
separation facilities and any increase in competition in the global Rare Earths market, either of which could increase
the global supply of Rare Earths. If this is at a rate faster than demand growth it could potentially lead to lower prices.
21
Lynas Rare Earths Limited | 2022 Annual Report 2.3
Exchange rates
Lynas is exposed to fluctuations in the US dollar as all sales are denominated in US dollars. Lynas borrows money
and holds a portion of cash in US dollars, which provides Lynas with a partial natural hedge. Accordingly, Lynas’
income from customers, and the value of its business, will be affected by fluctuations in the rate by which the
US dollar is exchanged with the Chinese Renminbi and the Australian dollar.
Lynas is exposed to fluctuations in the Malaysian ringgit (MYR), which is the currency that dominates Lynas’ cash
operating outflows in Malaysia. In addition, most of Lynas’ non-current assets are Lynas Malaysia assets which are
denominated in MYR.
Adverse movements in the Australian dollar against the US dollar and the MYR may have an adverse impact on
Lynas’ financial position and operating results. The following table shows the average USD/AUD and MYR/AUD
exchange rates over the past five years:
30 June 2022
$
30 June 2021
$
30 June 2020
$
30 June 2019
$
30 June 2018
$
USD/AUD
MYR/AUD
0.7258
3.0698
0.7468
3.0806
0.6714
2.8233
0.7156
2.9521
0.7391
2.9837
In-China market prices for Rare Earths are denominated in the Chinese Renminbi. A devaluation in the Chinese
Renminbi would increase attractiveness in Chinese exports and China’s internal supply. Fluctuation in the Chinese
Renminbi against the US Dollar therefore also increases the foreign exchange exposure on Lynas.
2.4
Operational and development risks
Lynas’ operations and development activities could be affected by various unforeseen events and circumstances,
such as hazards in exploration, the ability of third parties to meet their commitments in accordance with
contractual arrangements, and the delivery and grades of ore and performance of processing facilities at design
specification. Factors such as these may result in increased costs, lower production levels and, following on from
that, lower revenue levels. Any negative outcomes flowing from these operational risks could have an adverse effect
on Lynas’ business, financial condition, profitability and performance.
2.5
Nature of mining
Mineral mining involves risks, which even with a combination of experience, knowledge and careful evaluation may
not be able to be fully mitigated. Mining operations are subject to hazards normally encountered in exploration and
mining. These include unexpected geological formations, rock falls, flooding, dam wall failure and other incidents
or conditions which could result in damage to plant or equipment, which may cause a material adverse impact on
Lynas’ operations and its financial results. Projects may not proceed to plan with potential for delay in the timing of
targeted output, and Lynas may not achieve the level of targeted mining output. Mining output levels may also be
affected by factors beyond Lynas’ control.
2.6 Mineral and ore reserves
No assurance can be given that the anticipated tonnages and grades of ore will be achieved during production or
that the anticipated level of recovery will be realised. Mineral resource and ore reserve estimates are based upon
estimates made by Lynas personnel and independent consultants. Estimates are inherently uncertain and are
based on geological interpretations and inferences drawn from drilling results and sampling analyses. There is no
certainty that any mineral resources or ore reserves identified by Lynas will be realised, that any anticipated level
of recovery of minerals will be realised, or that an identified ore reserve or mineral resource will be a commercially
mineable (or viable) deposit which can be legally and economically exploited.
Further, the grade of mineralisation which may ultimately be mined may differ materially from what is predicted.
The quantity and resulting valuation of ore reserves and mineral resources may also vary depending on, amongst
others, metal prices, cut-off grades and estimates of future operating costs (which may be inaccurate). Production
can be affected by many factors. Any material change in the quantity of ore resources, mineral reserves, grade, or
stripping ratio may affect the economic viability of any project undertaken by Lynas.
Lynas’ estimated mineral resources and ore reserves should not be interpreted as assurances of commercial viability
or potential or of the profitability of any future operations. Investors should be cautioned not to place undue reli-
ance on any estimates made by Lynas. Lynas cannot be certain that its mineral resource and ore reserve estimates
22
www.LynasRareEarths.comDirectors’ Report are accurate and cannot guarantee that it will recover the expected quantities of metals. Future production could
differ dramatically from such estimates for the following reasons:
• actual mineralisation or Rare Earth grade could be different from those predicted by drilling, sampling,
feasibility or technical reports;
increases in the capital or operating costs of the mine;
•
• decreases in Rare Earth oxide prices;
• changes in the life-of-mine plan;
•
the grade of Rare Earths may vary over the life of a Lynas project and Lynas cannot give any assurances that
any particular mineral reserve estimate will ultimately be recovered; or
• metallurgical performance could differ from forecast.
The occurrence of any of these events may cause Lynas to adjust its mineral resource and reserve estimates or
change its mining plans. This could negatively affect Lynas’ financial condition and results of operations. Moreover,
short-term factors, such as the need for additional development of any Lynas project or the processing of new or
different grades, may adversely affect Lynas.
Lynas reports its mineral resources and ore reserves in accordance with the Australian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”).
2.7
Processing operations
Lynas’ operations are subject to the operating risks associated with Rare Earth processing, including performance of
processing facilities, and the related risks associated with storage and transportation of raw materials, products and
residues. These operating risks have the potential to cause personal injury, property damage and environmental
contamination, and may result in the shutdown of affected facilities and in business interruption and the imposition
of civil or criminal penalties, and negatively impact the reputation of Lynas.
The hazards associated with Lynas’ mining and processing operations and the related storage and transportation of
products and residues include:
• pipeline and storage tank leaks and ruptures;
• explosions and fires;
• mechanical failures; and
• chemical spills and other discharges or releases of toxic or hazardous substances or gases.
These hazards may cause personal injury and loss of life, damage to property and contamination of the environ-
ment, which may result in suspension of operations and the imposition of civil or criminal penalties, including
fines, expenses for remediation and claims brought by governmental entities or third parties. Although Lynas has
detailed and closely managed plans to mitigate these risks and maintains property, business interruption and
casualty insurance of types and in the amounts that it believes is customary for the chemicals industry, Lynas is not
fully insured against all potential hazards incidental to its businesses.
2.8
Availability of key inputs, Including water
The Mt Weld Concentration Plant and the Lynas Malaysia Plant rely on the ready availability of key inputs, including
chemical reagents, water, electricity and gas. Any inability of Lynas to obtain such inputs in sufficient quantities on
a timely basis could materially adversely affect Lynas’ operations. For example, the insolvency of key suppliers may
adversely affect the availability of chemical reagents. In addition, the water supply to the Mt Weld Concentration
Plant is primarily sourced from a local aquifer supplemented by recycling, and the water supply to the Lynas
Malaysia plant is primarily sourced from the local Kuantan water supply infrastructure, supplemented by recycling.
Reductions in water availability from those sources, for example due to changes in weather patterns or failures of
infrastructure, could materially adversely affect the availability of water to the Lynas operations.
2.9
Supply chain and counterparty risk
Lynas is dependent on contractors and suppliers to supply vital goods and services to its operations, including for
the supply of chemicals and other materials. Lynas is therefore exposed to the possibility of adverse developments
in the business environments of its contractors and suppliers, including in respect of the ability of those contractors
and suppliers to meet their commitments under sales contracts. Any disruption to services or supplies may have an
adverse effect on Lynas’ financial business and financial condition.
23
Lynas Rare Earths Limited | 2022 Annual Report 2.10 Reliance on key personnel
Lynas’ execution capacity is substantially attributable to the role played by a group of its senior management and
key employees. Lynas’ future success depends significantly on the full involvement of these key executives and
employees and its ability to continue to retain and recruit high-level personnel. The loss of key employees could
significantly affect Lynas’ operations.
In addition, industrial and labour disputes, work stoppages and accidents, and logistical and engineering difficulties
may also have an adverse effect on Lynas’ profitability and share price.
2.11
Customer risks
Lynas’ revenue is dependent on continuing sales to its key customers, many of whom require delivery to specific
timetables of products that comply with detailed specifications. The loss of key customers could significantly affect
Lynas’ business, for example due to disputes with customers, customers switching to other suppliers or technolo-
gies, or customer businesses being adversely affected by events outside the control of Lynas, including customer
insolvency or declining markets for the end-products of customers.
2.12
Industry Trends, including changes in technology
Changes in technology, including switches to renewable energy sources, present both opportunities and risks to
the Lynas business. As technologies and consumer trends continue to evolve, new competing technologies may
emerge that may reduce demand for Lynas Rare Earth products. Any significant trends away from technologies
that utilise Lynas Rare Earths products could materially adversely affect the Lynas business.
2.13
Project development risks
Lynas is undertaking significant and complex construction projects, primarily related to the new Lynas Rare
Earth facility in Kalgoorlie. Construction projects are subject to numerous risks, many of which are outside the
control of Lynas, including project delays and cost overruns, disputes with contractors, insolvency of contractors,
problems with design, delays in commissioning or ramp-up and new facilities not performing in accordance with
expectations.
3.
3.1
Regulatory, legal and environmental risks
General regulatory risks
Lynas’ business is subject, in each of the countries in which Lynas operates, to various national and local laws and
regulations relating to the mining, production, marketing, pricing, transportation and storage of Lynas’ products
and residues. A change in the legislative and administrative regimes, taxation laws, interest rates, and other legal
and government policies may have an adverse effect on the assets, operations and ultimately the financial perfor-
mance of Lynas and the market price of Lynas shares. Other changes in the regulatory environment (including
applicable accounting standards) may have a material adverse effect on the carrying value of material assets or
otherwise have a material adverse effect on Lynas’ business and financial condition.
3.2
Licences, permits, approvals, consents and authorisations
Lynas’ mining and production activities are dependent on the granting and maintenance of appropriate licences,
permits, approvals, and regulatory consents and authorisations (including those related to interests in mining tene-
ments and those related to the operation of the Lynas plants in Australia and Malaysia), which may not be granted
or may be withdrawn or be made subject to limitations at the discretion of government or regulatory authorities.
Although such licences, permits, approvals and regulatory consents and authorisations may be granted, continued
or renewed (as the case may be), there can be no assurance that such licences, permits, approvals and regulatory
consents and authorisations will be granted, continued or renewed as a matter of course, or as to the terms of
renewals or grants, including that new conditions, or new interpretations of existing conditions, will not be imposed
in connection therewith. Whether such licences, permits, approvals and regulatory consents and authorisations
may be granted, continued or renewed (as the case may be) often depends on Lynas being successful in obtaining
the required statutory approvals for proposed activities. If there is a failure to obtain or retain the appropriate
licences, permits, approvals and regulatory consents and authorisations, or if there is a material delay in obtaining
or renewing them or they are granted subject to onerous conditions or withdrawn, then Lynas’ ability to conduct its
mining and production activities may be adversely affected.
24
www.LynasRareEarths.comDirectors’ Report 3.3
Political risks and government actions
Lynas’ operations could be affected by government actions in Australia, Malaysia and other countries or jurisdictions
in which it has interests. Lynas is subject to the risk that it may not be able to carry out its operations as it intends,
including because of a change in government, legislation, guidelines, regulation or policy, including in relation to
the environment, the Rare Earths sector, competition policy, native title and cultural heritage. Such changes could
affect land access, the granting of licences and other tenements, the approval of developments and freedom to
conduct operations.
The possible extent of introduction of additional legislation, regulations, guidelines or amendments to existing
legislation that might affect Lynas’ business is difficult to predict. Any such government action may require
increased capital or operating expenditures and could prevent or delay certain operations by Lynas, which could
have a material adverse effect on Lynas’ business and financial condition.
Lynas also may not be able to ensure the security of its assets located outside Australia, and is subject to risks of,
among other things, loss of revenue, property and equipment as a result of hazards such as expropriation, war,
insurrection and acts of terrorism and other political risks and increases in taxes and government royalties. The
effects of these factors are difficult to predict and any combination of one or other of the above may have a material
adverse effect on Lynas’ business and financial position.
3.4 Malaysian regulatory matters
Without limiting the generality of the risks specified above in this section, as announced on 27 February 2020, the
Malaysian Atomic Energy Licensing Board (AELB) has renewed the current operating licence for the Lynas Malaysia
plant for three years expiring March 2023, subject to the following ongoing key conditions:
• Lynas must submit a work development plan for the construction of the PDF and report on its development
status as determined by the AELB.
• Lynas must ensure that the Cracking and Leaching plant outside Malaysia is in operation before July 2023.
After that period, Lynas will no longer be allowed to import raw materials containing Naturally Occurring
Radioactive Material (NORM) into Malaysia.
• Holding of the financial deposit will be maintained for compliance with the relevant licence conditions.
To the extent that Lynas does not, or is unable to, comply with relevant licence conditions including the key condi-
tions specified above, and/or comply with licence conditions within the timeframes prescribed, then Lynas’ licences
and approvals may be revoked. Government action, including legal action, may be also taken by or at the direction
of the Malaysian government in order to ensure that the terms and conditions of Lynas’ licences and approvals are
complied with to levels satisfactory to, and within the timeframes prescribed by, the Malaysian government.
3.5
Environmental risks
Lynas’ activities are subject to extensive laws and regulations controlling not only the mining of, exploration for
and processing of Rare Earths, but also the possible effects of such activities upon the environment and interests
of local communities. In the context of obtaining environmental permits, including the approval of reclamation
plans, Lynas must comply with known standards, existing laws and regulations which may entail greater or lesser
costs and delays depending on the nature of the activity to be permitted and how stringently the regulations are
implemented by the permitting authority. With increasingly heightened government and public sensitivity to
environmental sustainability, environmental regulation is becoming more stringent, and Lynas could be subject
to increasing environmental responsibility and liability, including laws and regulations dealing with air quality,
water and noise pollution and other discharges of materials into the environment, plant and wildlife protection,
the reclamation and restoration of certain of its properties, greenhouse gas emissions, the storage, treatment and
disposal of residues and the effects of its business on the water table and groundwater quality.
Sanctions for non-compliance with these laws and regulations may include administrative, civil and criminal penal-
ties, revocation of permits and corrective action orders. These laws sometimes apply retroactively. In addition, a
party can be liable for environmental damage without regard to that party’s negligence or fault. Given the sensitive
nature of this area, Lynas may be exposed to litigation and foreseen and unforeseen compliance and rehabilitation
costs despite its best efforts.
25
Lynas Rare Earths Limited | 2022 Annual Report 3.6
Climate change risks
Climate change and the rapidly evolving response to it may lead to a number of risks, including but not limited to:
•
Increased political, policy and legal risks (e.g. the introduction of regulatory changes aimed at reducing the
impact of, or addressing climate change, including reducing or limiting carbon emissions);
Increased capital and operational costs, including increased costs of inputs and raw materials; and
•
• Technological change and reputational risks associated with Lynas’ conduct.
Climate change may also result in more extreme weather events and physical impacts on Lynas due to the energy
intensive nature of Lynas’ operations, and Lynas’ current reliance on fossil fuels for mining and processing activities.
To mitigate this risk, and meet customer demand for sustainable production, Lynas is committed to transitioning to
a hybrid energy solution for our Mt Weld Mine and Concentration Plant, including renewable energy.
3.7
Disposal of residues
At the Mt Weld Mine and Concentration Plant, the Lynas Malaysia Plant, and the new Lynas Kalgoorlie Rare Earths
Processing Plant, Lynas operations generate/will generate residue materials in the form of solids, liquids and
gases. Lynas has appropriate plans in place for the treatment, sale or disposal of each of those residues. Failure to
implement those plans could have a material effect on Lynas’ licensing conditions and may adversely affect its
operations.
3.8
Community acceptance and reputation
Lynas recognises that a strong mutual relationship with each community in which it operates is a pre-condition to
successful operations. Failure to maintain those relationships and the acceptance by those communities may have
an adverse effect on Lynas’ operations.
In addition, Lynas recognises the importance of maintaining its reputation with its stakeholders including share-
holders, regulatory authorities, communities, customers and suppliers. Failure to maintain its reputation with some
or all stakeholders may have a negative effect on the future performance of Lynas.
3.9
Legal action
As announced on 29 July 2021, the judicial review application lodged in Malaysia by the anti-Lynas activists
challenging the processes followed during the August 2019 renewal of the Lynas Malaysia operating licence was
dismissed with a costs order made in favour of Lynas. As announced on 23 August 2021, a notice of appeal has been
lodged by the anti-Lynas activists challenging the dismissal of the judicial review application.
It is possible that in the future, Lynas could be exposed to other litigation or proceedings, either from shareholders,
financiers, regulators or members of the communities in which Lynas operates.
3.10 Health and safety
Lynas is subject to extensive laws and regulation in respect of the health and safety of its people and communities,
and the protection and rehabilitation of the environments within which it operates. Lynas must comply with known
standards, existing laws and regulations which may entail greater or lesser costs and delays depending on the
nature of the activity to be permitted and the implementation of the regulations by the permitting authority.
3.11
Tax risks
Lynas is subject to taxation and other imposts in Australia, Malaysia and other countries or jurisdictions in which it
has interests. In addition to the normal level of income tax imposed on all industries, companies in the resources
sector are required to pay government royalties, direct and indirect taxes and other imposts. The profitability of
companies in these industries can be affected by changes in government taxation and royalty policies or in the
interpretation or application of such policies. Further, changes in tax law, or changes in the way tax law is expected
to be interpreted, in the various jurisdictions in which Lynas operates, may affect the tax liabilities of Lynas.
4.
4.1
Financial risks
Debt facilities and covenants
Lynas has financing arrangements in place which are subject to acceleration and enforcement rights in the event
of a default. To date, the Japan Australia Rare Earths B.V. (JARE) loan facility has been secured over all the assets of
Lynas, other than Malaysia and Malawi assets.
26
www.LynasRareEarths.comDirectors’ Report Enforcement may involve enforcement of security over the assets of Lynas and its material subsidiaries, including
appointing a receiver. The principal amount of the JARE facility was US$141m as at 30 June 2022. The principal
amount will be due for repayment in fixed loan repayments between 31 December 2022 and 30 June 2030.
In the event significant uncertainty arises in relation to Lynas’ ability to fully repay, refinance or reschedule the
outstanding balances of the JARE loan facility by the maturity date of 30 June 2030, Lynas’ ability to continue as a
going concern may also be affected.
In addition, Lynas’ existing debt facilities are subject to a range of covenants. A failure to comply with any of these
debt covenants may require Lynas to seek amendments, waivers of covenant compliance or alternative borrowing
arrangements. There is no assurance that its lenders would consent to such an amendment or waiver in the event
of non-compliance, or that such consent would not be conditional upon the receipt of a cash payment, revised
payout terms, increased interest rates, or restrictions in the expansion of debt facilities in the foreseeable future, or
that its lenders would not exercise rights that would be available to them, including among other things, calling an
event of default and demanding immediate payment of outstanding borrowings. If such a demand was made and
appropriate forbearance or refinance arrangements could not be reached, Lynas may not have sufficient available
funds to meet that demand.
4.2
Funding risk
Lynas’ existing debt facility agreements restrict its ability to incur further debt except in certain circumstances.
Should Lynas experience a protracted decline in earnings, there is a possibility that the quantum of debt and/or
equity funding available to Lynas would not be sufficient to execute its strategy (including its development of large
scale projects) which could have a negative impact on the future financial performance or position of Lynas.
5.
5.1
General risks
General economic conditions
Lynas’ operating performance and financial performance is influenced by a variety of general economic and busi-
ness conditions including the level of inflation, interest rates, exchange rates and government fiscal, monetary and
regulatory policies. Prolonged deterioration in general economic conditions, including an increase in interest rates
or decrease in consumer and business demand, could be expected to have an adverse impact on Lynas’ business,
results of operations or financial condition and performance.
5.2
Accounting standards
Accounting standards may change. This may affect the reporting earnings of Lynas and its financial position from
time to time. Lynas has previously and will continue to assess and disclose, when known, the effect of adopting new
accounting standards in its periodic financial reporting.
5.3
Force majeure events
Events may occur within or outside Lynas’ key markets that could affect global economies and the operations
of Lynas. The events include, but are not limited, to acts of terrorism, an outbreak of international hostilities, fires,
floods, earthquakes, changes in weather patterns or other severe weather events, labour strikes, civil wars, natural
disasters, outbreaks of disease or other natural or man-made events or occurrences that can have an adverse effect
on market conditions, the demand for Lynas’ product offering and services and Lynas’ ability to conduct business.
5.4
Cyber security
Cyber security risks are increasing in the external environment. Cyber security risks include computer viruses
targeting IT systems, unauthorised access, cyber-attack (either targeted at Lynas for financial gain or due to
geopolitical matters), social media disinformation campaigns and other similar matters. A cyber event may lead to
adverse impacts on Lynas’ operations and financial performance.
6.
6.1
Task Force on Climate-related Financial Disclosures (TCFD)
Climate Governance
ESG, including climate-related risks and opportunities, is overseen by the Board on recommendations from the
Audit, Risk & ESG Committee and the executive. At an executive level, the Lynas Leadership Team is responsible for
ESG strategy and oversight, including climate-related risks and opportunities.
27
Lynas Rare Earths Limited | 2022 Annual Report In FY2022, key initiatives undertake to enhance climate-related governance included:
• Lynas made a commitment to the Science Based Targets initiative in September 2021.
• The company’s Greenhouse Gas Policy was launched in September 2021.
• To deliver on the Greenhouse Gas Policy action to consider greenhouse gas emissions as part of business
strategy and decision-making, the capital expenditure approval process was updated to include the inte-
gration of a Life Cycle Assessment of Greenhouse Gas emissions as part of all capital expenditure requests,
including for major growth projects.
• Continued progress on climate-related strategies and reporting across all sites.
• Continued R&D and external engagement, including with customers, partners, suppliers and academic
institutions.
• Continued work to assess and develop science-based GHG reduction targets, with the objective of limiting the
global temperature increase to 1.5°C.
6.2
Climate Strategy
Climate-related risks are integrated into company risk management processes.
Material climate-related issues at Lynas’ operating sites are outlined below:
Site
Climate-related issues
Lynas Malaysia, Gebeng, Malaysia
Rising temperature/heatwave frequency
Mt Weld, Western Australia
Water scarcity
According to the World Bank’s Climate Risk Report, from 1970 to 2013, Peninsular Malaysia, Sabah and Sarawak
regions experienced surface mean temperature increase of 0.14°C–0.25°C per decade and the frequency and
intensity of heat waves in Malaysia is forecast to increase significantly due to a warming climate1.
Australia is recognised as the driest inhabited continent. In the remote area of Western Australia where Lynas
operates, rainfall is already scarce and there is a recognition that the state is likely to become drier2.
In FY2022, Lynas developed new plans and implemented strategies to address material climate-related issues.
In Malaysia, extensive work was undertaken to reduce room temperature in the product finishing area of the
Lynas Malaysia plant, by improving natural ventilation and installing a new roofing and a roof turbine ventilator.
These changes were effective in reducing the heat impact on staff by lowering indoor temperatures and this work
remains a focus of our continuous improvement program. From a water supply perspective, a process modification
has been designed with the objective of decreasing our fresh water consumption by 40%. This modification will be
implemented during the July 2022 quarter.
In Western Australia, key initiatives of the Mt Weld expansion plan announced on 3 August 2022 are designed to
address water scarcity. This includes a state-of-the-art high recovery water recycling circuit from the tailings dam
and an additional bore water desalination plant. In addition, Lynas plans to implement surface water management
to capture seasonal rain events and divert into managed aquifer/ ground water recharge that also forms flood
protection infrastructure for climate change resilience. To address Greenhouse Gas emissions, a staged transition
from diesel fuelled power generation to gas and then hybrid renewable power generation is also planned.
6.3
Climate Risk Management
Lynas’ actively manages climate-related risks through ongoing assessment and monitoring, undertaking Life Cycle
Assessments as part of all new capital expenditure requests, and by ensuring that climate-related risks and oppor-
tunities are considered as part of business strategy and planning.
The processes for identifying, assessing and managing climate-related risks are integrated into the Lynas risk
management framework.
1 https://climateknowledgeportal.worldbank.org/sites/default/files/2021-08/15868-WB_Malaysia%20Country%20Profile-WEB.pdf
2 https://www.climatechangeinaustralia.gov.au/en/changing-climate/state-climate-statements/western-australia/
28
www.LynasRareEarths.comDirectors’ Report
Climate-related risks and opportunities have been identified and include:
Transition risks
• Existing and emerging regulatory requirements: Increased political, policy and
legal risks such as the introduction of regulatory changes to reduce or address
the impact of climate change, including reducing or limiting Greenhouse Gas
emissions
• Costs: Increased capital and operational costs including higher cost inputs
and raw materials; investment in new low emissions technologies; cost of
complying with changes to emissions regulations
• Technology: Technological changes to address the effects of climate change
that may result in decreased demand for Lynas’ products
• Reputation: Reputational risks associated with Lynas’ conduct
Physical risks
• More extreme weather events causing physical impacts on Lynas facilities and
people
• Water scarcity requiring additional investment in water recycling and identifi-
cation of new water sources
• Current reliance on fossil fuels and investment required to transition to cleaner
energy sources
Opportunities
• Lynas’ unique position as the only scale producer of separated rare earth
materials outside of China means that the company has an important role to
play in providing key inputs to green technologies designed to limit the effects
of climate change, including for NdFeB motors used in direct drive wind
turbines, and in hybrid and electric vehicles.
6.4 Metrics and Targets
Lynas monitors and reports on total Scope 1 and Scope 2 GHG emissions in line with the GHG Protocol and
Australia’s National Greenhouse Energy Reporting (NGER). Lynas continues to work to develop its reporting on
Scope 3 categories.
Company-wide total Scope 1 and 2 emissions for 2020-2022 financial years are as follows:
Greenhouse Gas Emissions (in metric tonnes of CO2 equivalents) (t CO2-e)
Reporting Year
Mt Weld
Kalgoorlie
Malaysia
Total
Scope 1
Scope 2
Scope 1
Scope 2
Scope 1
Scope 2
Scope 1
Scope 2
FY18
FY19
FY20
FY21
FY22
27,726
23,693
21,137
19,697
25,649
–
–
–
–
–
–
34,071
34,071
45,407
49,544
61,797
45,407
60,245
49,544
–
–
–
32,634
43,387
53,771
43,387
97,159
–
–
–
39,951
43,917
59,648
43,917
–
956
–
40,807
42,831
67,412
42,831
103,565
110,243
Scope 1+2
107,204
110,179
Scope 1 and Scope 2 intensity targets were set for FY2020 and FY2021. The FY2020 intensity target was a reduction
of CO2 emissions across both operating sites by 2020 to 10% below 2018 levels. The 2021 intensity target was a
29
Lynas Rare Earths Limited | 2022 Annual Report reduction of CO2 emissions across both operating sites to 10% below 2019 levels. These targets were not met due
to COVID-19 related temporary production shutdowns in FY20 and operation at 75% of production capacity in FY21.
However, on an absolute basis, CO2 emissions were lower in FY20 and FY21 than in previous years.
Lynas committed to the Science Based Targets initiative in September 2021 and the company is working to assess
and develop science-based GHG reduction targets with the objective of limiting the global temperature increase
to 1.5°C.
BASIS OF REPORT
The report is based on the guidelines in The Group 100 Incorporated publication Guide to the Review of Operations
and Financial Condition.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is bound by the requirements and guidelines of the relevant environmental protection authorities
for the management and rehabilitation of mining tenements owned or previously owned by the Group. Mining
tenements are being maintained and rehabilitated following these guidelines. The Group is also bound by the
requirements of its operating licence in Malaysia. There have been no known breaches of any of these requirements
and guidelines.
We continue to focus on ensuring positive relationships with regulators and local communities, and compliance
with regulatory requirements in both jurisdictions in which we operate.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Except as disclosed in the review of operations, the factors and business risks that affect future performance and
the subsequent events, there have been no significant changes in the state of affairs of the Group during the year
ended 30 June 2022.
CORPORATE GOVERNANCE STATEMENT
The Corporate Governance Statement of the Group, current on the date that the Directors’ Report is signed in
accordance with a resolution of Directors made pursuant to s.298 (2) of the Corporations Act 2001, is located on the
Group’s website, www.lynasrareearths.com.
SHARES ISSUED UPON EXERCISE OF PERFORMANCE RIGHTS
During the financial year 1,332,975 Performance Rights were exercised as set out in Note E.7 to the Financial
Statements.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During or since the end of the financial year, the Group has paid a premium in respect of a contract insuring all
Directors and Officers of the Group against liabilities incurred as a Director or Officer of the Group, to the extent
permitted by the Corporations Act 2001, that arise because of the following:
(a) a wilful breach of duty; or
(b)
a contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the
Corporations Act 2001.
The insurance contract prohibits disclosure of the premiums payable under the contract. The premiums are
not included as part of the Directors’ remuneration in Section H of the Remuneration Report or Note E.7 to the
Financial Statements.
30
www.LynasRareEarths.comDirectors’ Report .NON-AUDIT SERVICES
During the year Ernst & Young, the Group’s auditor, has performed certain other services in addition to the audit
and review of the Financial Statements.
Details of amounts paid or payable to the auditor for non-audit services provided during the year are outlined
in Note E.3 to the Financial Statements. The Directors have considered the non-audit services provided during
the year by the auditor, and are satisfied that the provision of non-audit services by the auditor during the year is
compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001
for the following reasons:
• All non-audit services were subject to the corporate governance procedures adopted by the Group and have
been reviewed by the Audit and Risk Committee to ensure they do not impact the integrity and objectivity of
the auditor; and
• The non-audit services provided do not undermine the general principles relating to auditor independence as
set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an
advocate for the Group or jointly sharing risks and rewards.
INDEMNIFICATION AND INSURANCE OF AUDITOR
During or since the end of the financial year, the Group entered into an agreement with its auditors, Ernst & Young,
indemnifying them against any claims by third parties arising from their report on the Annual Financial Report,
except where the liability arises out of conduct involving a lack of good faith. No payment has been made to
indemnify Ernst & Young during or since the financial year.
COMMITTEE MEMBERSHIP
During the financial year, the Group had the following Committees of the Board of Directors: Audit, Risk & ESG
Committee, Health, Safety & Environment Committee, and Nomination, Remuneration and Community Committee.
Directors acting on the Committees of the Board during the year ended 30 June 2022:
Audit, Risk & ESG
G. Murdoch(c)
P. Etienne
J. Humphrey
(c) Chair of Committee
Health, Safety
& Environment
P. Etienne(c)
K. Conlon
V. Guthrie
Nomination,
Remuneration & Community
J. Humphrey(c)
K. Conlon
G. Murdoch, V. Guthrie
As summarised in the Corporate Governance Statement, the Audit & Risk Committee consists of independent
Directors.
31
Lynas Rare Earths Limited | 2022 Annual Report The number of Directors’ meetings held during the year and the number of Board and Board committee meetings:
Number of meetings held:
Number of meetings attended:
A. Lacaze
K. Conlon
P. Etienne
V. Guthrie
J. Humphrey
G. Murdoch
Directors’
Meetings
Audit, Risk
& ESG
Health, Safety &
Environment
Nomination,
Remuneration &
Community
9
9
9
9
8
9
9
6
6
6
6
6
6
6
5
5
5
5
4
5
5
4
4
4
4
4
4
4
AUDITOR’S INDEPENDENCE DECLARATION
We have obtained an independence declaration from our auditors, Ernst & Young, which follows the Directors’
Declaration.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Corporations Instrument 2016/191 issued by the Australian Securities and
Investments Commission, in relation to the “rounding off” of amounts. Amounts in the Directors’ Report and
Financial Statements have been rounded off, in accordance with the Instrument, to the nearest thousand dollars,
unless otherwise stated.
SUBSEQUENT EVENTS
On 3 August 2022, Lynas announced an approximately $500m project to expand capacity at the Mt Weld mine and
concentration plant to meet accelerating market demand for rare earth materials.
With the exception of the above, there have been no other events subsequent to 30 June 2022 that would require
accrual or disclosure in this financial report.
32
www.LynasRareEarths.comDirectors’ Report Sustainability Statement
Financial year ended 30 June 2022
Operating, at all times, in accordance with best practice sustainability principles is a core value for Lynas and
its people. We set high standards for ourselves. We seek at all times to have a positive effect on our people, our
customers, our suppliers, our communities and the environment.
The products we sell are traceable from our mine in Western Australia. Our customers can receive product
assurance certificates to confirm that the Rare Earths they purchase from Lynas are sourced from our mine in
Mt Weld, Western Australia, and processed at our plant in Gebeng, Malaysia. Our products are used in industries
where environmental provenance and sustainability of business practices are of high importance. Life Cycle
Assessments conducted in conjunction with customers provide environmental assurance for the Lynas Rare Earths
used in customer products. Our local communities also expect us to consistently comply with high standards in this
area.
The Lynas Environmental, Social and Governance Report (ESG Report) for FY2022 will be sent to shareholders at the
same time as the 2022 Annual Report is sent to shareholders. In addition, a copy of the Lynas ESG Report for FY2022
will be available on the Group’s website, www.lynasrareearths.com.
33
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited
Financial year ended 30 June 2022
On behalf of the Board, I am pleased to present our company’s Remuneration Report for the 2022 financial year
and provide an update on Lynas Rare Earths’ remuneration philosophy and outcomes this year.
Remuneration philosophy
Lynas’ remuneration objective is to ensure that shareholder value is maximised by the attraction and retention of
talented people. We remunerate our people competitively and consistently with comparable employment market
conditions. Lynas is the largest producer of separated Rare Earths outside of China and our remuneration frame-
work takes into account the global nature of the rare earths business and the complexity of the critical minerals
supply chain.
The Lynas Short Term Incentive (STI) rewards performance in core business drivers. In FY2022, this included EBITDA,
NdPr production and NdPr unit operating costs, as well as key non-financial performance metrics that are of
particular importance to shareholders, including Safety, Environment, Social and Governance (ESG) and Regulatory
performance.
The Long Term Incentive (LTI) recognises that capital projects are a substantial growth driver for the company. The
LTI issued in FY2022 has two components which are designed to be aligned with the creation of sustainable long
term shareholder value. The first of these components is Relative Total Shareholder Returns (TSR) assessed over a
three year period, relative to other peer group companies. The second component was related to the Lynas 2025
growth plan which is aligned with the company’s strategic growth objectives.
Strong business performance
Lynas Rare Earths delivered record sales receipts and cash generation in the 2022 financial year despite ongoing
challenges with COVID-19, logistics and inflationary pressures. Process improvements and the company’s continued
focus on cost control ensured that Lynas was well positioned to benefit from favourable market conditions and
increased demand for rare earth materials.
The Lynas 2025 growth project is a strategic program for the business and substantial progress was made during
the year including full approvals received for the Kalgoorlie Rare Earths Processing Facility and progress on
construction. The LTI recognises that growth capital projects are a significant driver of value in this business.
Responding to the external environment
In 2022, the employment market remained strong and inflation increased in both of Lynas’ operating jurisdictions.
Competitive pressures on compensation also came from increased activity in the critical minerals industry and the
recognition of Lynas as an industry leader. In acknowledgement of this, the Board engaged Guerdon Associates Pty
Limited to provide advice and market benchmarking data in respect of the Lynas Leadership team and other senior
managers.
Considering the highly competitive market, a review of board, executive and employee salaries was undertaken
during the year.
The benchmarking identified that there was a significant gap between the remuneration of the Lynas Leadership
team and certain senior managers’ remuneration and other peer group companies, in part due to the executive
team receiving only three fixed remuneration increases of 3% each across an eight year period.
The Board recognises the unique value of the skills and experience of our leadership team and took action to adjust
fixed remuneration during the year. The new executive remuneration framework approved in March 2022 to apply
in FY2023 is set at a level that enables the company to attract and retain top talent, whilst incorporating an at risk
component tied to performance measures.
Lynas seeks to remain an employer of choice and benefit from the recognition that the critical minerals industry
is an attractive and future facing industry. In addition to competitive salaries and benefits, Lynas offers a compa-
ny-wide employee bonus scheme (excluding those eligible for STI/LTI).
34
www.LynasRareEarths.comDirectors’ Report FY23 changes
The Board continues to assess the external environment in line with our talent acquisition and retention strategies.
In recognition of the benchmarking review undertaken during the year, a review of the Lynas STI and LTI Plans was
conducted to ensure they remained comparable with peer group companies. The review showed that the Lynas
remuneration structure no longer reflects the specialist nature or proven performance of Lynas personnel and
the ‘at risk’ components of remuneration is below that offered by other comparable companies. The Board plans
to make changes to the STI and LTI Plans in the 2023 financial year to ensure that Lynas’ remuneration remains
competitive within the global rare earths industry so that experienced personnel can be both attracted and
retained.
During the year the Board also reviewed Directors’ fees. At the 2022 Annual General Meeting, the directors will seek
approval from shareholders to increase the maximum aggregate amount available for non-Executive Director fees
to $2.2 million. The current aggregate fee pool for the Non-Executive Directors of $1,250,000 was last approved at
the AGM held on 20 November 2012. The proposed increase in the Fee Pool is designed to ensure that fees can be
set at a level that will continue to attract and retain non-executive Directors with the requisite qualifications and
experience and allow for the appointment of additional non-executive Directors as appropriate to meet the needs
of our growing company.
The Nomination, Remuneration and Community Committee remains firmly focused on delivering shareholder
value. We trust this report will assist your understanding of our remuneration objectives and outcomes.
Yours sincerely,
John Humphrey
Chair
Nomination, Remuneration and Community Committee
35
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited continued
This report sets out Lynas’ remuneration framework and outcomes for Key Management Personnel (KMP) for the
financial year ended 30 June 2022. This report has been prepared and audited in accordance with the requirements
of the Corporations Act 2001 and its regulations.
A. LIST OF KMP
The KMP during the financial year ended 30 June 2022 were as follows:
KMP
Position
Location
Term as KMP
Executive Director
A. Lacaze
CEO and Managing Director
Australia
Full Financial Year
Non-Executive Directors
K. Conlon
P. Etienne
V. Guthrie
J. Humphrey
G. Murdoch
Chairman, Non-Executive Director
Non-Executive Director,
Chair of the HSE Committee
Non-Executive Director
Non-Executive Director, Chair of the
Nomination, Remuneration &
Community Committee
Non-Executive Director, Chair of the
Audit, Risk & ESG Committee
Australia
Australia
Australia
Australia
Full Financial Year
Full Financial Year
Full Financial Year
Full Financial Year
Australia
Full Financial Year
Executives
G. Sturzenegger
CFO
S. Leonard
K. Leung
P. Le Roux
M. Ahmad
General Counsel and Company Secretary
Vice President – Upstream
Vice President – Downstream
Vice President – Malaysia
Malaysia
Australia
Australia
Malaysia
Malaysia
Full Financial Year
Full Financial Year
Retired 31 December 2021
Full Financial Year
Full Financial Year
B. OUR REMUNERATION GOVERNANCE
The Nomination, Remuneration and Community Committee is responsible for reviewing and making recom-
mendations to the Board on the remuneration arrangements for Directors and Executives. The Nomination,
Remuneration and Community Committee assesses, on a regular basis, the appropriateness of the nature and
amount of KMP remuneration.
In fulfilling these duties and to support effective governance processes, the Committee:
• consists of independent Non-Executive Directors and has an independent Chair;
• has unrestricted access to management and any relevant documents; and
• engages external advisers for assistance to the extent appropriate and necessary (e.g. detailing market levels
of remuneration).
36
www.LynasRareEarths.comDirectors’ Report
C. OUR REMUNERATION FRAMEWORK
Overview
Lynas’ remuneration objective is to maximise shareholder benefits by attracting, retaining and motivating
talented people, including our board of directors and executive management team, at a cost that is acceptable to
shareholders. We remunerate our people competitively and consistently with comparable employment market
conditions. Lynas is the largest producer of separated Rare Earths outside of China and our remuneration frame-
work takes into account the global nature of the rare earths business and the complexity of the critical minerals
supply chain.
Component
Description
How does it link to performance and strategy?
Fixed
Remuneration
Fixed remuneration consists of
base salary, non-monetary benefits
and statutory superannuation
contributions.
Fixed remuneration is set at a level that enables Lynas
to attract and retain talented people, at a cost which
is acceptable to shareholders. It reflects the global
nature of the rare earths supply chain, macro-eco-
nomic factors, the need to attract experienced
expatriate personnel to the Lynas Malaysia plant
in Gebeng near Kuantan in regional Malaysia and
the competitive market for resources personnel in
Western Australia.
Individual remuneration reflects the role, responsibili-
ties, and experience of the relevant employee.
Short Term
Incentive (STI)
The STI program is based on the
achievement of annual financial
and non-financial goals.
STI supports the delivery of annual performance
goals which are selected by the Board considering
the budget and Lynas’ strategic initiatives.
Further details of the STI Plan
Structure are set out below.
The STI Plan ensures annual remuneration is
competitive to facilitate retention of key personnel.
Half of the STI is paid as deferred equity (perfor-
mance rights).
Long Term
Incentive (LTI)
The LTI program provides a reward
for longer term performance
LTI focuses on long term performance goals which
create sustained value for shareholders.
Further details of the LTI Plan
Structure are set out below.
LTI is paid as deferred equity (performance rights)
which aligns the interests of Executives and
shareholders in ensuring the sustainable, long term
performance of Lynas.
Our remuneration mix aims to achieve a balance between fixed and performance related components. This
contributes to a high performance culture led by the Executive team.
The diagrams below illustrate the remuneration mix range for Executives based on the target and maximum LTI
and STI opportunities for FY22. The actual remuneration mix for Executives will vary depending on the level of
performance relative to the LTI and STI performance objectives.
CEO
Other Executive KMP
42.5 – 44.4%
50.6 – 53.3%
22.2 – 25.5%
26.6 – 30.3%
31.9 – 33.3%
18.9 – 20.0%
Fixed
STI
LTI
37
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited continued
Short Term Incentive Structure
The structure of the STI Plan is as follows:
Description
Under the STI Plan, Executive KMP can earn an annual incentive based on performance during
the year.
STI Plan performance conditions align with Lynas’ annual operational and financial goals. The
performance conditions are chosen to incentivise performance that is consistent with desired
business outcomes and which contributes to longer term growth in shareholder value.
The STI Plan is at risk remuneration. Actual awards depend on performance against the
performance conditions.
Participants
Executive KMP and any employee of Lynas who is invited by the Board are eligible to participate.
In addition to the Executive KMP, during FY22, four members of the Lynas Leadership Team
and ten senior employees who are critical to the delivery of Lynas’ short-term operational and
financial goals were invited to participate in the STI Plan.
STI Opportunity
Target Performance: In FY22, up to 50% of fixed remuneration for Executive KMP (including
CEO) and Lynas Leadership Team. Up to 20% of fixed remuneration for other employees.
Maximum Opportunity: In FY22, up to 60% of fixed remuneration for over-achievement
compared to targets for Executive KMP and Lynas Leadership Team. Up to 24% of fixed remu-
neration for other employees.
Basis of award
Half of the STI opportunity is awarded in cash and half is awarded in performance rights.
The number of STI performance rights to be granted is calculated by taking the volume
weighted average price of Lynas’ shares for the 5 trading days up to and including the date
of Board approval (the PR Value). The relevant STI grant is divided by the PR Value and
rounded to the nearest whole number.
Performance
Conditions
The Board selects both financial and non-financial performance conditions based on the Lynas
budget and strategic plan.
For FY22, three bands of performance were set for each performance condition:
• Threshold: 90% of budget – 80% award
• Target: 100% of budget – 100% award
• Maximum: 110% of budget – 120% award
If performance falls between the Threshold and Maximum levels then awards are pro-rated.
No STI Plan awards will be made if there is a fatality during the performance period.
Financial performance conditions are selected by the Board using the approved budget.
The performance goals are selected based on the budget and considering market conditions.
The financial conditions are assessed annually.
For the FY22 STI Plan the three financial performance conditions selected were: (1) EBITDA
Target; (2) NdPr Production; and (3) NdPr Operating Costs. Each financial condition has a 20%
weighting.
The Board selects non-financial conditions for the STI Plan based on the team/individual
responsibilities in the context of the Lynas strategic plan. The non-financial conditions are
assessed annually.
For the FY22 STI Plan the three areas selected for assessment were: (1) Safety/COVID
Management; (2) ESG; and (3) Regulatory.
Financial
Performance
Conditions
(60% weighting)
Non-financial
Performance
Conditions
(40% weighting)
38
www.LynasRareEarths.comDirectors’ Report Why were these
performance
conditions
selected?
A combination of financial and non-financial performance conditions aligns the STI Plan with
growth and sustainable returns for shareholders.
The financial conditions selected by the Board in FY22 are measures which directly affect Lynas’
profitability and financial performance. Due to the anticipated increases in capital expenditure
for Lynas 2025 growth projects, EBITDA rather than EBIT was selected by the Board as the
financial growth measure.
The non-financial performance conditions reflect areas that are critical for the success of
Lynas and complement the measures included in the other quantitative STI and LTI targets.
Non-financial performance conditions are designed to address areas of particular importance to
shareholders. The non-financial performance conditions for FY22 were selected by the Board for
the following reasons:
•
•
•
Safety/COVID-19 management: Critical to the continued safe operation of the Mt Weld
and Lynas Malaysia operations.
ESG: Important to Lynas’ stakeholders and the future sustainable growth of the business.
Regulatory: Ensures the careful maintenance of Lynas’ key operating licences in the
jurisdictions in which it operates.
Performance conditions for the STI Plan are reviewed annually by the Board to ensure they
remain aligned with business strategy and shareholder interests.
How and when
is performance
assessed?
Performance is assessed annually.
For the financial conditions, the Board calculates the results after the end of the performance
period.
For the non-financial conditions, the Board assesses the performance of the Executives based
on the recommendations from the Nomination, Remuneration and Community Committee.
Eligibility for
dividends
Holders of performance rights are not eligible for dividends until the performance rights have
been converted into shares.
Cessation of
employment
STI performance rights are subject to a vesting condition of continued employment at Lynas for
a period of 12 months after the grant.
Clawback
If the Board becomes aware of any material misstatement in its financial statements due to:
(i) non-compliance with a financial reporting requirement; (ii) the participant’s misconduct; or
(iii) the misconduct of any other Lynas personnel under the supervision of the relevant partici-
pant, the Board has authority under the clawback policy to require repayment of vested awards,
forfeit unvested performance rights or withhold the payment or allocation of all or any part of an
award.
Change of Control
Event
There is no automatic vesting of performance rights on a change in control. On the occurrence
of a change in control event, the Board will determine (in its discretion) how the performance
rights may be affected.
Disposal restriction
Performance rights granted under the STI Plan are not transferable.
39
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited continued
Long Term Incentive Structure
This section summarises the LTI grants made in FY22.
Description
Under the LTI Plan, annual grants of performance rights are made to eligible participants to
align remuneration with the creation of sustainable shareholder value over the long term.
Participants
Executive KMP and any employee of Lynas who is invited by the Board are eligible to participate.
LTI Opportunity
CEO – Up to 75% of fixed remuneration
Other KMP and Lynas Leadership Team – Up to 37.5% of fixed remuneration
Other invited employees – Up to 25% of fixed remuneration
The number of LTI performance rights to be granted is calculated by taking the volume
weighted average price of Lynas’ shares for the 5 trading days up to and including the date of
Board approval (the PR Value). The relevant LTI grant is divided by the PR Value and rounded to
the nearest whole number.
Vesting Date
9 September 2024
Performance
Conditions
Two vesting conditions apply to the LTI grants made during FY22:
•
•
Relative Total Shareholder Return (TSR)
Lynas 2025 Project Target
In addition to the CEO and other Executive KMP, during FY22, four members of the Lynas
Leadership Team and ten senior employees who are critical to the delivery of Lynas’ long term
strategy were invited to participate in the program.
Relative TSR –
50% weighting
Relative TSR is assessed over a three year period from 1 July 2021 to 30 June 2024, relative to
other companies in the ASX200 index (Peer Group Companies). For any performance rights to
vest under the TSR vesting condition, Lynas’ performance must be equal to or greater than the
51% percentile of Peer Group Companies.
The percentage of the performance rights that may vest is determined as follows:
Lynas TSR Ranking across the TSR Period
Proportion of Performance Rights that vest
Below 51st percentile
At the 51st percentile
Between the 51st percentile
and the 76th percentile
At or above 76th percentile
0%
50%
Between 50% and 100% as determined on
a linear basis (rounded to the nearest 5%)
100%
Lynas 2025
Project Target –
50% weighting
The Lynas 2025 Project Target vesting condition is that by 30 June 2024:
•
the Lynas Kalgoorlie plant achieves capacity to sustain operations at its nameplate
capacity (70% weighting); and
• development of capacity to separate heavy rare earths (30% weighting).
40
www.LynasRareEarths.comDirectors’ Report Why were these
performance
conditions
selected?
The vesting conditions for the LTI Plan were selected due to their alignment with Lynas’ long
term strategic goals.
The Relative TSR Vesting condition was selected because it ensures alignment between
competitive shareholder return and reward for the executive. The comparison with peer group
companies in the ASX200 index provides an objective, external market-based performance
measure relative to Lynas’ peer group companies. Relative TSR is widely understood and
accepted by key stakeholders.
The Lynas 2025 Project Targets were selected as it is the next significant step in the growth
of the Lynas business for the benefit of all shareholders. The ramp up of the Lynas Kalgoorlie
plant is a key component of the Lynas 2025 Project. HRE separation capacity is a strategically
important capability.
How and when
is performance
assessed?
Relative TSR will be calculated by Lynas and tested by an external adviser as soon as practicable
at the end of the performance period.
The Lynas 2025 Project Target will be assessed by the Board after 30 June 2024.
Eligibility for
dividends
Holders of performance rights are not eligible for dividends until the performance rights have
been converted into shares.
Cessation of
employment
If a participant ceases employment prior to the vesting date of the performance rights, then
unless otherwise determined by the Board (in its discretion), the unvested performance rights
will continue to be subject to the rules of the LTI Plan until the vesting date, at which time the
performance rights will vest in accordance with the rules of the LTI Plan.
The Board may exercise its discretion to cancel the performance rights, except where the
participant has been retrenched where cancellation will occur within 36 months of the Board’s
decision.
Clawback
If the Board becomes aware of any material misstatement in its financial statements due to:
(i) non-compliance with a financial reporting requirement; (ii) the participant’s misconduct;
or (iii) the misconduct of any other Lynas personnel under the supervision of the relevant
participant, the Board has authority under the clawback policy to require repayment of vested
awards, forfeit unvested performance rights or withhold the payment or allocation of all or any
part of an award.
Change of Control
Event
There is no automatic vesting of performance rights on a change in control. On the occurrence
of a change in control event, the Board will determine (in its discretion) how the performance
rights may be affected.
Disposal restriction
Performance rights granted under the LTI Plan are not transferable.
41
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited continued
D. REMUNERATION OUTCOMES IN FY22
FY22 STI Grant Performance Outcomes
An award at 100.8% will be made under the FY22 STI Plan. The table below sets out the outcomes of the FY22 STI
Plan.
Performance Outcome – Financial Performance Conditions
Performance
condition
Lynas has recorded excellent financial performance in FY22. All financial performance thresh-
olds in the FY22 STI Plan have been met or exceeded.
Outcome –
target achieved
Performance
Condition
Target
Actual
Weighting
Threshold
90%
Target
100%
Maximum
110%
EBITDA
Forecast
target*
Greater
than 110%
of target
NdPr
Production
Targets
NdPr
Operating
Costs
Forecast
target*
97% of
target
Forecast
Target*
95% of
target
20%
20%
20%
Weighted
Outcome
(%)
24.0%
18.9%
17.9%
*
The NdPr Operating Cost, NdPr Production Target and EBITDA Target are commercial in confidence.
The NdPr Operating Cost. NdPr Production Target and EBITDA Targets are set by the Board based on the
annual budget.
Performance Outcome – Non-Financial Performance Conditions
Performance
Conditions
The Board assessed the performance of the Executives in three key areas: (1) Safety/COVID
Management; (2) ESG; and (3) Regulatory.
Outcome –
target achieved
The Board has assessed an award at 100% (weighted outcome of 40%) against the non-financial
performance conditions.
Performance
Condition
Target
Outcome
During FY2022, safe workplace conditions were
achieved, including one year LTI free at Mt Weld.
All COVID-19 cases were handled effectively despite
COVID affecting both Australia and Malaysian
operations. Production disruption due to COVID-19
was minimised due to effective implementation of
COVID protocols.
Safety/COVID-19
Management
Safety performance
was measured on
a company-wide
basis. Trends in
safety statistics were
considered, including
LTIF, TRIFR, high
potential incidents.
COVID-19 performance
was measured by the
success in achieving
COVID protocols at
both sites, together
with the speed and
efficacy of responses
to COVID issues.
42
www.LynasRareEarths.comDirectors’ Report Outcome –
target achieved
continued
Performance
Condition
Target
Outcome
ESG
ESG performance is
measured by reference
to improvements in
ESG performance and
reporting during the
performance period.
Regulatory
Regulatory perfor-
mance is assessed
based on regulatory
compliance in
Malaysia and Australia.
ISO accreditations maintained at both operating
sites.
No significant ESG related compliance breaches
during the year.
Significant progress was achieved in ESG reporting,
including the release of the inaugural enhanced
Lynas ESG Report. The new ESG reporting frame-
work has led to a measurable increase in Lynas ESG
recognition and analyst ratings, including MSCI
ESG rating upgraded to ‘AA’ rating (from ‘A’); the
Lynas 2021 ESG recognised as “Comprehensive”, the
highest rating awarded by the Australian Council
of Superannuation Investors; and Mt Weld Tailings
Acceleration Initiative shortlisted for Golden Gecko
Award for environmental excellence (administered
by WA DMIRS).
Lynas Modern Slavery Statement was enhanced
and was approved by Australian Border Force.
Achieved stated 2021 gender diversity targets with
24.5% women senior executives, 21.5% women
employees and 50% women on the Board as at
31 December 2021.
Lynas committed to the Science Based Targets
initiative (SBTi) and launched a Greenhouse Gas
Policy and initiatives during the year. A plan to
deliver Greenhouse Gas reduction targets has been
presented.
Positive community engagement in both Malaysia
and Australia as evidenced by community support
for the PDF in Malaysia and the Kalgoorlie Rare
Earth Processing Facility.
Successful approval of the EIA for the PDF and
commencement of the project in Malaysia.
Successful EPA determination for the Kalgoorlie
Facility and commencement of construction.
Continued compliance in operations with no
regulatory non-compliances. Continued engage-
ment with Malaysian and Australian regulators
and government, including with the incoming
Australian government.
43
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited continued
2019 LTI Grant Performance Outcomes
The LTI performance rights issued in September 2019 to KMP and LLT members were granted subject to the
following vesting conditions:
• EBIT Target – 1/3rd weighting
• Relative TSR – 1/3rd weighting
• Lynas 2025 Project Targets – 1/3rd weighting
Certain senior personnel critical to the delivery of Lynas 2025 projects were issued with LTI performance rights
subject to the sole performance conditions relating to Lynas 2025 project targets.
The table below sets the performance outcomes.
Performance Outcome – EBIT Target
Performance
condition
Satisfaction of the EBIT Growth vesting condition required Lynas’ average annual EBIT growth
at the end of the period from 1 July 2019 to 30 June 2022 to be at least 7% per annum using the
EBIT figure from 1 July 2018 to 30 June 2019 as a base.
Outcome –
Maximum
performance
achieved
If cumulative average annual increase is at least 7% per annum then 50% of the EBIT portion will
vest. If the cumulative average annual increase is at least 10% per annum, then 100% of the EBIT
portion will vest. If the cumulative average annual increase is at least 15% per annum, then 120%
of the EBIT portion will vest (EBIT Overperformance Portion).
As set out in the table below the EBIT Target vesting condition has been achieved at
maximum.
FY2019 (Base)
FY2020
FY2021
FY2022
Cumulative Adjusted EBIT over the three years
Base EBIT over the three years
Average % growth over the 3 years compared to the base period figure
Outcome (EBIT)
$56.4 million
($6.2 million)
$169.5 million
$540.6 million
$703.9 million
$169.2 million
105%
Performance Outcome – Relative TSR
Vesting
Condition
Satisfaction of the Relative TSR vesting condition required Lynas’ TSR to be at least at the 51st
percentile of ASX 200 companies calculated over the three year period from 26 August 2019 to
26 August 2022.
The Relative TSR performance rights will vest in accordance with the following scale:
Lynas TSR Ranking
Proportion of Performance Rights that vest
Below 51st percentile
At the 51st percentile
Between the 51st percentile and the
76th percentile
0%
50%
Between 50% and 100% as determined on
a linear basis (rounded up or down to the
nearest 5%)
At or above 76th percentile
100%
Outcome – still to
be assessed
Performance against the Relative TSR vesting condition will be assessed after the three year
performance period ends.
44
www.LynasRareEarths.comDirectors’ Report Performance Outcome – Lynas 2025 Project Targets
Vesting
Condition
The Lynas 2025 Project Target performance conditions were that by July 2022, Lynas has
demonstrated:
the capacity to separate heavy rare earths;
•
• a speciality cerium capability; and
• delivery of project milestones for the Lynas 2025 project in Western Australia.
Outcome – partially
achieved (2/3rd)
A performance outcome of 66.67% has been assessed against the Lynas 2025 Project Targets.
HRE Separation: Despite significant progress on the US Project, the HRE separation capacity
performance condition has not been achieved. This is primarily due to the delay in the US
Government’s decision on funding and the decision by Lynas not to proceed with the Project
prior to funding being confirmed. Lynas submitted all documentation, including a fully scoped
plant design, to the USG on time according to agreed milestones.
Cerium Capability: Speciality cerium capability has been established in Malaysia. Speciality
Cerium Chloride production has been developed for use in water treatment applications. This
is sold at a premium to market price. Speciality LaCe polishing powder precursors are also now
produced at the Lynas Malaysia Plant.
Lynas 2025 Project Milestones: The key Western Australian elements of the Lynas 2025 Project
announced in May 2019 were the completion of Australian based cracking and leaching and
development of increased throughput at both Mt Weld and the LAMP to achieve production
capacity of 10,500 tpa NdPr finished product.
Since 2019 significant process has been made against the Lynas 2025 project milestones. The
Kalgoorlie cracking and leaching site was selected in December 2019 and since that time good
progress has been made against the progress milestones.
Progress has also been made in respect of the Mt Weld project. The capacity expansion to
10,500 tpa NdPr finished product and beyond is now fully scoped and the project is underway.
E. LINKING REMUNERATION AND GROUP PERFORMANCE
Sections C and D above set out how the LTI and STI Plan Performance Conditions are linked to Lynas’ performance.
The table below provides further information about the financial performance of Lynas over the past five years.
Revenue ($‘000)
Profit / (loss) before tax ($‘000)
Profit / (loss) after tax ($‘000)
Shareholder capital ($’000)
Annual average share price
Closing share price at financial year end
Basic earnings / (loss) per share (cents)
Diluted earnings / (loss) per share (cents)
30 June
2018
30 June
2019
30 June
2020
30 June
2021
30 June
2022
374,105
53,404
53,119
363,541
83,274
83,079
305,111
(19,156)
(19,395)
489,024
157,487
157,083
920,014
535,756
540,824
1,395,417
1,398,264
1,424,847
1,859,598
1,859,598
$2.04
$2.34
8.84
8.29
$1.99
$2.57
12.50
11.90
$2.20
$1.94
(2.79)
(2.79)
$4.15
$5.71
18.08
17.99
$8.51
$8.73
59.95
58.70
Separately, changes in the share based remuneration from one year to the next reflect the effect of amortising the
accounting value of options and performance rights over their vesting period and the impact of forfeitures which
can relate to both the current and prior periods in a given fiscal period. In certain periods, a negative value may be
presented which results when the forfeitures recognised in a period are greater than the accounting amortisation
expense for the current portion of the vesting period.
45
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited continued
F. SERVICE AGREEMENTS
The CEO and Managing Director and Executives each have a services contract/ employment contracts which are on
reasonable commercial conditions. The key provisions of the agreement are:
CEO and Managing Director
Other Executives
Type
Services contract
Employment contract
Duration
Ongoing
Notice by
Executive
3 months
Ongoing
3 months
Notice by Lynas
6 months
Termination without notice for serious misconduct
3 – 6 months
Termination without notice for serious misconduct
Treatment of
incentives on
termination:
On resignation, then unless otherwise determined
by the Board (in its discretion), the unvested
performance rights will continue to be subject
to the rules of the LTI Plan until the vesting date,
at which time the performance rights will vest in
accordance with the rules of the LTI Plan.
On resignation, then unless otherwise determined
by the Board (in its discretion), the unvested
performance rights will continue to be subject
to the rules of the LTI Plan until the vesting date,
at which time the performance rights will vest in
accordance with the rules of the LTI Plan.
The Board may exercise its discretion to cancel the
performance rights, except where the participant
has been retrenched where cancellation will occur
within 36 months of the Board’s decision.
The Board may exercise its discretion to cancel the
performance rights, except where the participant
has been retrenched where cancellation will occur
within 36 months of the Board’s decision.
G. NON-EXECUTIVE DIRECTOR REMUNERATION
Remuneration policy
Consistent with Lynas’ approach, remuneration of Non-Executive Directors is set at a level that enables Lynas to
engage high calibre individuals. We focus on ensuring that the Board of Directors reflects the broad mix of skills,
experience and diversity necessary to oversee Lynas in its position as a significant participant in the critical global
market for Rare Earth products.
Non-Executive Director fees are set considering: (1) the fees paid by companies of a similar size and/or industry;
(2) the time and commitment required; (3) the risk and responsibilities; and (4) the required commercial and
industry experience.
To ensure independence, Non-Executive Director fees are fixed, and Non-Executive Directors do not receive any
performance-related or ‘at-risk’ compensation.
Remuneration Structure
Non-Executive Director fees consist of Director fees and Committee fees. Each Non-Executive Director (other than
the Chairman of the Board) received a fee for each committee of which they are members (capped at two commit-
tees). The Chairman of the Board does not receive committee fees.
The current aggregate fee pool for the Non-Executive Directors of $1,250,000 was approved at the AGM held on
20 November 2012.
46
www.LynasRareEarths.comDirectors’ Report The Non-Executive Director fees payable for the period from 1 July 2021 to 30 June 2022 were:
Board fees per annum
Chairman
Non-Executive Director
Committee Chair (Audit, Risk & ESG)
Committee Chair (Nomination Remuneration & Community/ Health, Safety & Environment)
Committee member (Audit, Risk & ESG)
Committee member (Nomination Remuneration & Community/ Health, Safety & Environment)
Amount
(exclusive of
superannuation)
$260,000
$120,000
$30,000
$25,000
$15,000
$12,500
Board fees were last reviewed effective from 1 January 2020. Committee fees remain unchanged from FY2019.
The remuneration for each of the Non-Executive Directors for the financial years ended 30 June 2022 and 30 June
2021 is set out in Section H below.
47
Lynas Rare Earths Limited | 2022 Annual Report Directors’ Report
Remuneration Report – Audited continued
H. DETAILS OF REMUNERATION
The figures included in the statutory table below for share based payments were not actually provided to the KMP
during FY2022 or FY2021. These amounts are calculated in accordance with accounting standards and are the
amortised IFRS fair values of equity and equity-related instruments that have been granted to the executives.
Short term
benefits
Post-employment
benefits
Long term
benefits
l
y
r
a
a
s
h
s
a
C
s
e
e
f
d
n
a
l
e
e
y
o
p
m
e
m
r
e
t
t
r
o
h
s
r
e
h
t
O
s
t
fi
e
n
e
b
y
r
a
t
e
n
o
m
-
n
o
N
s
t
fi
e
n
e
b
n
o
i
t
a
n
m
r
e
T
i
s
t
n
e
m
y
a
p
d
n
a
n
o
i
t
a
u
n
n
a
n
o
i
s
n
e
p
r
e
h
t
o
s
t
n
e
m
y
a
p
-
r
e
p
u
S
$
$
$
$
$
e
c
i
v
r
e
s
g
n
o
L
$
e
v
a
e
l
)
t
e
n
(
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
e
c
n
a
m
r
o
f
r
e
P
%
d
e
t
a
e
r
l
l
a
t
o
T
$
$
l
a
t
o
T
$
Name
FY22
Executive Director
A. Lacaze
1,333,785
332,906
Non-Executive Directors
K. Conlon
P. Etienne
J. Humphrey
G. Murdoch
V. Guthrie
Executives
S. Leonard
G. Sturzenegger
K. Leung (1)
P. Le Roux
M. Ahmad
260,000
175,200
160,000
162,500
145,000
453,540
566,058
274,007
513,074
356,759
–
–
–
–
–
–
–
–
–
–
–
–
23,568
50,929
1,415,900
55%
3,157,088
23,568
–
16,000
16,250
–
23,568
–
11,784
75,924
51,477
–
–
–
–
–
–
–
–
–
–
8,947
–
–
–
–
139,753
323,300
594,418
359,410
255,175
0%
0%
0%
0%
0%
28%
45%
61%
43%
50%
283,568
175,200
176,000
178,750
145,000
675,287
1,029,172
1,215,746
1,214,052
821,412
49,479
139,814
145,908
165,066
158,001
–
–
–
100,578
–
–
–
189,629
–
–
Total
4,399,923
991,174
100,578
189,629
242,139
59,876
3,087,956
43%
9,071,275
FY21
Executive Director
A. Lacaze
1,251,897
133,540
Non-Executive Directors
K. Conlon (2)
M. Harding (3)
P. Etienne
J. Humphrey
G. Murdoch
V. Guthrie (4)
Executives
A. Arnold (5)
S. Leonard (6)
G. Sturzenegger
K. Leung
P. Le Roux
M. Ahmad
234,375
65,000
175,200
156,875
159,375
106,157
588,365
146,709
533,105
532,331
466,740
336,593
51,058
–
58,043
55,975
56,980
84,069
–
–
–
–
119,736
–
–
–
–
–
–
–
–
Total
4,752,722
439,664
119,736
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,694
64,383
830,776
42% 2,302,290
20,011
5,424
-
14,903
15,141
3,147
10,892
6,058
–
21,694
79,238
42,076
–
–
–
–
–
–
–
–
–
–
–
–
–
2,506
–
29,945
–
–
(30,026)
39,297
220,628
206,982
250,016
174,743
0%
0%
0%
0%
0%
0%
(3%)
20%
34%
31%
32%
38%
254,386
70,424
175,200
171,778
174,516
109,304
620,289
194,570
811,776
846,927
972,710
637,481
240,278
96,834
1,692,416
29%
7,341,650
–
–
–
–
–
–
–
–
–
–
–
(1) Resigned effective 31 December 2021
(4) Appointed effective 1 October 2020
(2) Appointed to Chair effect 30 September 2020
(5) Resigned effective 16 April 2021
(3) Resigned effective 30 September 2020
(6) Appointed effective 27 January 2021
48
www.LynasRareEarths.com
I.
KMP EQUITY HOLDINGS
1. Shareholdings
The following table outlines the shares held directly, indirectly and beneficially by directors and KMP as at
30 June 2022.
Name
A. Lacaze
K. Conlon
P. Etienne
J. Humphrey
G. Murdoch
V. Guthrie
S. Leonard
G. Sturzenegger
K. Leung
P. Le Roux
M. Ahmad
Balance
at beginning
of year
Purchased
during the
year
On exercise of
performance
rights
Sold during
the year
2,742,961
130,635
75,284
56,494
161,007
6,000
–
700,000
413,000
349,579
14,000
–
–
–
–
–
4,000
–
–
–
–
–
1,053,185
–
–
–
–
–
–
55,217
54,116
56,285
44,553
(1,150,000)
–
–
–
–
–
–
(255,217)
(440,058)
(291,886)
(13,366)
Other
–
–
–
–
–
–
–
–
(27,058)
–
–
Balance at
end of year
2,646,146
130,635
75,284
56,494
161,007
10,000
–
500,000
–
113,978
45,187
Total
4,648,960
4,000
1,263,356
(2,150,527)
(27,058)
3,738,731
Other movements in relation to KMP shareholdings relate to the person ceasing to be a member of the KMP
during the year.
2. Share Based Remuneration – Performance Rights
Performance Rights are issued with no consideration payable on exercise. As at year end the Group had on issue to
directors and KMP the following Performance Rights to acquire ordinary fully paid shares:
Series
Grant date
Number
Date vested
and exercisable
Expiry date
Exercise
price
AU
AV
BC
BE
BF
BG
BE(1)
BF(1)
BG(1)
BI
BJ
BI(2)
BJ(2)
BK
BL
BM
BN(3)
28 November 2017
28 November 2017
27 November 2018
26 August 2019
26 August 2019
26 August 2019
26 November 2019(1)
26 November 2019(1)
26 November 2019(1)
09 September 2020
09 September 2020
26 November 2020(1)
26 November 2020(1)
20 September 2021
20 September 2021
20 September 2021
29 November 2021
127,567
154,044
147,433
111,559
111,559
133,870
136,435
136,435
163,722
207,422
207,422
208,856
208,856
91,825
75,179
75,179
50,410
28 August 2020
28 August 2020
28 August 2021
26 August 2022
26 August 2022
26 August 2022
26 August 2022
26 August 2022
26 August 2022
09 September 2023
09 September 2023
09 September 2023
09 September 2023
31 August 2022
31 August 2024
31 August 2024
31 August 2022
28 August 2022
28 August 2022
28 August 2023
26 August 2024
26 August 2024
26 August 2024
26 August 2024
26 August 2024
26 August 2024
09 September 2025
09 September 2025
09 September 2025
09 September 2025
31 August 2022
31 August 2026
31 August 2026
31 August 2022
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
Value per
performance
right at
grant date
$2.060
$1.620
$1.463
$2.340
$2.340
$1.660
$2.290
$2.290
$1.630
$1.790
$2.400
$2.500
$3.560
$7.600
$5.230
$7.600
$8.570
49
Lynas Rare Earths Limited | 2022 Annual Report Remuneration Report – Audited continued
Grant date
Number
Date vested
and exercisable
29 November 2021
29 November 2021
74,636
74,636
31 August 2024
31 August 2024
Expiry date
31 August 2026
31 August 2026
Exercise
price
$ 0.00
$ 0.00
Value per
performance
right at
grant date
$5.680
$8.570
2,497,045
Series
BO(3)
BP(3)
Total
(1) Performance rights relates to the CEO in series BD to BG were approved by the Board on 26 August 2019, subject to approval at the
AGM. These performance rights were subsequently approved at the AGM on 26 November 2019.
(2) Performance rights relates to the CEO in series BH to BJ were approved by the Board on 9 September 2020, subject to approval at the
AGM. These performance rights were subsequently approved at the AGM on 26 November 2020.
(3) Performance rights relates to the CEO and other staff in series BN to BP were approved by the Board on 20 September 2021, subject to
approval at the AGM. These performance rights were subsequently approved at the AGM on 26 November 2021.
Fair value of Performance Rights
The fair value of each Performance Right is estimated on the date it is granted using volume-weighted average
share price, Monte Carlo and Binomial valuation methodologies. The following assumptions were considered in the
valuation of Performance Rights granted during the year ended 30 June 2022:
PR’s issued to employees other than CEO
PR’s issued to CEO
Series BK
Series BL
Series BM
Series BN
Series BO
Series BP
Grant date
5 day VWAP
Exercise price
Dividend yield
Expected volatility
Risk-free Rate
Expiry date
20 Sept 2021
$7.60
$0.00
Nil
61.5%
0.17%
31 Aug 2022
20 Sept 2021
$7.60
$0.00
Nil
61.5%
0.17%
31 Aug 2026
20 Sept 2021
$7.60
$0.00
Nil
61.5%
0.17%
31 Aug 2026
29 Nov 2021
$8.57
$0.00
Nil
59.6%
0.92%
31 Aug 2022
29 Nov 2021
$8.57
$0.00
Nil
59.6%
0.92%
31 Aug 2026
29 Nov 2021
$8.57
$0.00
Nil
59.6%
0.92%
31 Aug 2026
No dividends have been paid in the past and so it is not appropriate to estimate future possible dividends in arriving
at the fair values. The life of the Performance Right is up to 5 years from date of grant (as specified above) and is
therefore not necessarily indicative of exercise patterns that may occur.
The resulting weighted average fair values for all Performance Rights granted for the benefit of Directors and KMP
during the year are:
Grant date
20 September 2021
20 September 2021
20 September 2021
29 November 2021
29 November 2021
29 November 2021
Number of
performance
rights
Fair value
per instrument
at valuation
date
Exercise
price per
instrument
First exercise date
Last exercise
or expiry date
91,825
75,179
75,179
50,410
74,636
74,636
$7.60
$5.23
$7.60
$8.57
$5.68
$8.57
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
31 August 2022
31 August 2022
31 August 2024
31 August 2026
31 August 2024
31 August 2026
31 August 2022
31 August 2022
31 August 2024
31 August 2026
31 August 2024
31 August 2026
Total
441,865
Except as specified in the table above, all Performance Rights granted for the benefit of Directors and KMP have
three-year vesting periods. The Performance Rights are exercisable up to five years after issue date, subject to
achievement of the relevant performance hurdles.
50
www.LynasRareEarths.comDirectors’ Report The following tables outline the Performance Rights granted for the benefit of Directors and KMP during the 2021
and 2022 financial years and those Performance Rights which have vested at each respective year-end.
Balance at
beginning
of year
Granted
Grant date
Exercised
Forfeited Net change
Balance at
end of year
30 June 2022
A. Lacaze
K. Conlon
P. Etienne
M. Harding
J. Humphrey
G. Murdoch
V. Guthrie
S. Leonard
G. Sturzenegger
K. Leung(1)
P. Le Roux
M. Ahmad
2,513,451
199,682
29 Nov 2021
(1,053,185)
(176,920)
(1,030,423)
1,483,028
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
69,862
279,294
269,465
317,370
223,932
33,724
20 Sept 2021
51,438
20 Sept 2021
54,866
20 Sept 2021
61,844
20 Sept 2021
40,311
20 Sept 2021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(55,217)
(54,116)
(56,285)
(44,553)
(36,533)
(36,925)
(38,359)
(29,994)
–
–
–
–
–
–
–
–
–
–
–
–
33,724
(40,312)
(36,175)
(32,800)
(34,236)
103,586
238,982
233,290
284,570
189,696
Total
3,673,374
441,865
(1,263,356)
(318,731)
(1,140,222)
2,533,152
(1) Although Kam Leung retired on 31 December 2021, the Board applied its discretion and allowed him to retain his performance rights
30 June 2021
A. Lacaze
K. Conlon
P. Etienne
M. Harding
J. Humphrey
G. Murdoch
V. Guthrie
A. Arnold
S Leonard
G. Sturzenegger
K. Leung
P. Le Roux
M. Ahmad
2,291,202
473,407
26 Nov 2020
(109,148)
(142,010)
222,249
2,513,451
–
–
–
–
–
–
272,112
–
292,682
296,839
355,482
240,572
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(98,106)
(174,006)
69,862
117,671
9 Sept 2020
–
9 Sept 2020
(102,988)
110,889
9 Sept 2020
115,517
9 Sept 2020
92,900
9 Sept 2020
(107,146)
(121,997)
(85,585)
–
(28,071)
(31,117)
(31,632)
(23,955)
–
–
–
–
–
–
(272,112)
69,862
(13,388)
(27,374)
(38,112)
(16,640)
–
–
–
–
–
–
–
69,862
279,294
269,465
317,370
223,932
Total
3,748,889
980,246
(624,970)
(430,791)
(75,515)
3,673,374
At 30 June 2022, 429,045 performance rights issued to A. Lacaze had vested and were exercisable (30 June 2021:
1,279,101). No other KMP had any performance rights that had vested and were exercisable (30 June 2021: nil).
51
Lynas Rare Earths Limited | 2022 Annual Report The Directors’ report is signed in accordance with a resolution of Directors made pursuant to s.298 (2)
of the Corporations Act 2001.
On behalf of the Directors,
Kathleen Conlon
Chairman
Sydney, 26 August 2022
52
www.LynasRareEarths.comDirectors’ Report Directors’ Declaration
The Directors declare that:
(a)
(b)
(c)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable;
in the Directors’ opinion, the attached financial report is in compliance with International Financial
Reporting Standards, as stated in the Basis of preparation note to the Financial Statements;
in the Directors’ opinion, the attached financial report and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of
the financial position and performance of the Group; and
(d) Directors have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by Corporations Instrument
98/1418. The nature of the deed of cross guarantee is such that each company which is party to the deed guaran-
tees to each creditor payment in full of any debt in accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which
the Corporations Instrument applies, as detailed in Note E.6 to the Financial Statements will, as a Group, be able
to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee.
Signed in accordance with a resolution of the directors made pursuant to s.295 (5) of the Corporations Act 2001.
On behalf of the Directors,
Kathleen Conlon
Chairman
Sydney, 26 August 2022
53
Lynas Rare Earths Limited | 2022 Annual Report
Auditor’s Independence
Declaration
54
www.LynasRareEarths.com A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Lynas Rare Earths Limited As lead auditor for the audit of the financial report of Lynas Rare Earths Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a.No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b.No contraventions of any applicable code of professional conduct in relation to the audit; and c.No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Lynas Rare Earths Limited and the entities it controlled during the financial year. Ernst & Young Gavin Buckingham Partner 26 August 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Lynas Rare Earths Limited As lead auditor for the audit of the financial report of Lynas Rare Earths Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a.No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b.No contraventions of any applicable code of professional conduct in relation to the audit; and c.No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Lynas Rare Earths Limited and the entities it controlled during the financial year. Ernst & Young Gavin Buckingham Partner 26 August 2022 Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent
Auditor’s Report
Independent auditor’s report to the members of
Lynas Rare Earths Limited
Report on the audit of the financial report
Opinion
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors declaration.
Independent auditor’s report to the members of
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Lynas Rare Earths Limited
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
Report on the audit of the financial report
and of its consolidated financial performance for the year ended on that date; and
Opinion
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
Basis for opinion
(collectively the Group), which comprises the consolidated statement of financial position as at
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
those standards are further described in the Auditor’s responsibilities for the audit of the financial
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
report section of our report. We are independent of the Group in accordance with the auditor
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors declaration.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
Act 2001, including:
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
and of its consolidated financial performance for the year ended on that date; and
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Key audit matters
Basis for opinion
Key audit matters are those matters that, in our professional judgment, were of most significance in
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
our audit of the financial report of the current year. These matters were addressed in the context of
those standards are further described in the Auditor’s responsibilities for the audit of the financial
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
report section of our report. We are independent of the Group in accordance with the auditor
a separate opinion on these matters. For the matter below, our description of how our audit addressed
independence requirements of the Corporations Act 2001 and the ethical requirements of the
the matter is provided in that context.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
financial report section of our report, including in relation to this matter. Accordingly, our audit
the Code.
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
procedures performed to address the matter below, provide the basis for our audit opinion on the
for our opinion.
accompanying financial report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For the matter below, our description of how our audit addressed
the matter is provided in that context.
55
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to this matter. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Lynas Rare Earths Limited | 2022 Annual Report
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of
Lynas Rare Earths Limited
Report on the audit of the financial report
Opinion
Independent Auditor’s Report
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors declaration.
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
and of its consolidated financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
Independent auditor’s report to the members of
Basis for opinion
Lynas Rare Earths Limited
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Report on the audit of the financial report
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
Opinion
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
(collectively the Group), which comprises the consolidated statement of financial position as at
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
the Code.
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
and the directors declaration.
for our opinion.
and of its consolidated financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Key audit matters
Act 2001, including:
Key audit matters are those matters that, in our professional judgment, were of most significance in
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For the matter below, our description of how our audit addressed
b.
the matter is provided in that context.
Basis for opinion
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to this matter. Accordingly, our audit
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
included the performance of procedures designed to respond to our assessment of the risks of
those standards are further described in the Auditor’s responsibilities for the audit of the financial
material misstatement of the financial report. The results of our audit procedures, including the
report section of our report. We are independent of the Group in accordance with the auditor
procedures performed to address the matter below, provide the basis for our audit opinion on the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
accompanying financial report.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
A member firm of Ernst & Young Global Limited
the Code.
Liability limited by a scheme approved under Professional Standards Legislation
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For the matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to this matter. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
accompanying financial report.
56
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
www.LynasRareEarths.com A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Lynas Rare Earths Limited As lead auditor for the audit of the financial report of Lynas Rare Earths Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a.No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b.No contraventions of any applicable code of professional conduct in relation to the audit; and c.No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Lynas Rare Earths Limited and the entities it controlled during the financial year. Ernst & Young Gavin Buckingham Partner 26 August 2022
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
2
Independent auditor’s report to the members of
Lynas Rare Earths Limited
Independent auditor’s report to the members of
Report on the audit of the financial report
Rehabilitation Provision
Lynas Rare Earths Limited
Opinion
How our audit addressed the key audit matter
Why significant
Report on the audit of the financial report
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
The Group incurs obligations for asset and site
(collectively the Group), which comprises the consolidated statement of financial position as at
Opinion
restoration and rehabilitation, which includes
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
requirements under its Full Operating Stage
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
License in Malaysia to manage water leached
(collectively the Group), which comprises the consolidated statement of financial position as at
then ended, notes to the financial statements, including a summary of significant accounting policies,
purification (WLP) and neutralisation underflow
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
and the directors declaration.
(NUF) residues arising from its production
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
process. As at 30 June 2022 the Group’s
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
then ended, notes to the financial statements, including a summary of significant accounting policies,
consolidated statement of financial position
specialists, we assessed the appropriateness
Act 2001, including:
and the directors declaration.
includes provisions of $148,080,000 in respect
of the rehabilitation cost estimates.
of such obligations as disclosed in Note D.5.
► Assessed the appropriateness of the
changes in cost estimates and other
assumptions underpinning the cost
estimates.
► With the involvement of our subject matter
Our audit procedures included the following:
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
► Assessed the qualifications, competence and
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Estimating the costs associated with these
objectivity of the Group’s external experts,
Act 2001, including:
obligations requires significant judgement in
the work of whom, formed the basis of the
relation to when the activities will take place, the
b.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
Group’s initial rehabilitation cost estimates
time required for rehabilitation to be effective,
for Lynas Advanced Materials Plant (LAMP),
the costs associated with the activities and
Kalgoorlie Rare Earths Facility and Mt Weld
economic assumptions such as discount rates
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
sites.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
and inflation rates. Given the significant
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Basis for opinion
judgements and assumptions involved, the
report section of our report. We are independent of the Group in accordance with the auditor
conditions with respect to the management
Group is required to continually reassess and
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
independence requirements of the Corporations Act 2001 and the ethical requirements of the
of WLP and NUF residues and assessed the
confirm that the assumptions used are
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
appropriateness of changes in assumptions
appropriate.
report section of our report. We are independent of the Group in accordance with the auditor
and calculations within the rehabilitation
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
cost estimates as a result of these changed
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
conditions.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
the Code.
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
for our opinion.
the Code.
Due to the value of the provision relative to net
assets and total liabilities and the significant
degree of estimation and judgment used to
determine the rehabilitation provision this was
considered to be a key audit matter.
► Inquired about any changes in license
Basis for opinion
► Tested the mathematical accuracy of the
rehabilitation models and assessed the
appropriateness of the assumed timing of
cashflows, inflation and discount rate
assumptions.
► Agreed payments made during the year in
Key audit matters
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
Key audit matters
connection with the rehabilitation of WLP to
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
bank statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in
a separate opinion on these matters. For the matter below, our description of how our audit addressed
► Inquired with the Group’s expert of changes
our audit of the financial report of the current year. These matters were addressed in the context of
the matter is provided in that context.
to the disturbed areas since the previous
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
annual reporting period.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
a separate opinion on these matters. For the matter below, our description of how our audit addressed
financial report section of our report, including in relation to this matter. Accordingly, our audit
the matter is provided in that context.
► Assessed the adequacy of the disclosures
included the performance of procedures designed to respond to our assessment of the risks of
relating to the Group’s provisions for
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
material misstatement of the financial report. The results of our audit procedures, including the
restoration and rehabilitation in the notes to
financial report section of our report, including in relation to this matter. Accordingly, our audit
procedures performed to address the matter below, provide the basis for our audit opinion on the
the financial statements.
included the performance of procedures designed to respond to our assessment of the risks of
accompanying financial report.
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
A member firm of Ernst & Young Global Limited
accompanying financial report.
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
57
Lynas Rare Earths Limited | 2022 Annual Report
Independent Auditor’s Report
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
3
Independent auditor’s report to the members of
Information other than the financial report and auditor’s report thereon
Lynas Rare Earths Limited
The directors are responsible for the other information. The other information comprises the
Report on the audit of the financial report
information included in the Company’s 2022 annual report other than the financial report and our
auditor’s report thereon. We obtained the directors’ report that is to be included in the annual report,
Opinion
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual
report after the date of this auditor’s report.
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
Our opinion on the financial report does not cover the other information and we do not and will not
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
and our related assurance opinion.
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors declaration.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Act 2001, including:
and of its consolidated financial performance for the year ended on that date; and
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Responsibilities of the directors for the financial report
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
The directors of the Company are responsible for the preparation of the financial report that gives a
those standards are further described in the Auditor’s responsibilities for the audit of the financial
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
report section of our report. We are independent of the Group in accordance with the auditor
and for such internal control as the directors determine is necessary to enable the preparation of the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
fraud or error.
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
the Code.
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
operations, or have no realistic alternative but to do so.
for our opinion.
Auditor’s responsibilities for the audit of the financial report
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
our audit of the financial report of the current year. These matters were addressed in the context of
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
a separate opinion on these matters. For the matter below, our description of how our audit addressed
audit conducted in accordance with the Australian Auditing Standards will always detect a material
the matter is provided in that context.
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
decisions of users taken on the basis of this financial report.
financial report section of our report, including in relation to this matter. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
accompanying financial report.
58
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
www.LynasRareEarths.com A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Lynas Rare Earths Limited As lead auditor for the audit of the financial report of Lynas Rare Earths Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a.No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b.No contraventions of any applicable code of professional conduct in relation to the audit; and c.No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Lynas Rare Earths Limited and the entities it controlled during the financial year. Ernst & Young Gavin Buckingham Partner 26 August 2022
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
4
Independent auditor’s report to the members of
Lynas Rare Earths Limited
Independent auditor’s report to the members of
Report on the audit of the financial report
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
Lynas Rare Earths Limited
judgment and maintain professional scepticism throughout the audit. We also:
Opinion
Report on the audit of the financial report
► Identify and assess the risks of material misstatement of the financial report, whether due to
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
(collectively the Group), which comprises the consolidated statement of financial position as at
Opinion
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
detecting a material misstatement resulting from fraud is higher than for one resulting from
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
(collectively the Group), which comprises the consolidated statement of financial position as at
then ended, notes to the financial statements, including a summary of significant accounting policies,
override of internal control.
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
and the directors declaration.
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
► Obtain an understanding of internal control relevant to the audit in order to design audit
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
then ended, notes to the financial statements, including a summary of significant accounting policies,
Act 2001, including:
and the directors declaration.
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
Act 2001, including:
and of its consolidated financial performance for the year ended on that date; and
estimates and related disclosures made by the directors.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
and of its consolidated financial performance for the year ended on that date; and
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
Basis for opinion
and, based on the audit evidence obtained, whether a material uncertainty exists related to
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Basis for opinion
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
report section of our report. We are independent of the Group in accordance with the auditor
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
independence requirements of the Corporations Act 2001 and the ethical requirements of the
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
to the date of our auditor’s report. However, future events or conditions may cause the Group to
report section of our report. We are independent of the Group in accordance with the auditor
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
cease to continue as a going concern.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
the Code.
► Evaluate the overall presentation, structure and content of the financial report, including the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
disclosures, and whether the financial report represents the underlying transactions and events
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
in a manner that achieves fair presentation.
for our opinion.
the Code.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
Key audit matters
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
business activities within the Group to express an opinion on the financial report. We are
for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in
responsible for the direction, supervision and performance of the Group audit. We remain solely
our audit of the financial report of the current year. These matters were addressed in the context of
Key audit matters
responsible for our audit opinion.
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
Key audit matters are those matters that, in our professional judgment, were of most significance in
a separate opinion on these matters. For the matter below, our description of how our audit addressed
We communicate with the directors regarding, among other matters, the planned scope and timing of
our audit of the financial report of the current year. These matters were addressed in the context of
the matter is provided in that context.
the audit and significant audit findings, including any significant deficiencies in internal control that we
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
identify during our audit.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
a separate opinion on these matters. For the matter below, our description of how our audit addressed
financial report section of our report, including in relation to this matter. Accordingly, our audit
the matter is provided in that context.
We also provide the directors with a statement that we have complied with relevant ethical
included the performance of procedures designed to respond to our assessment of the risks of
requirements regarding independence, and to communicate with them all relationships and other
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
material misstatement of the financial report. The results of our audit procedures, including the
matters that may reasonably be thought to bear on our independence, and where applicable, actions
financial report section of our report, including in relation to this matter. Accordingly, our audit
procedures performed to address the matter below, provide the basis for our audit opinion on the
taken to eliminate threats or safeguards applied.
included the performance of procedures designed to respond to our assessment of the risks of
accompanying financial report.
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
A member firm of Ernst & Young Global Limited
accompanying financial report.
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
59
Lynas Rare Earths Limited | 2022 Annual Report
Independent Auditor’s Report
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of
Lynas Rare Earths Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
and of its consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For the matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to this matter. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
accompanying financial report.
60
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
www.LynasRareEarths.com A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Lynas Rare Earths Limited As lead auditor for the audit of the financial report of Lynas Rare Earths Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a.No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b.No contraventions of any applicable code of professional conduct in relation to the audit; and c.No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Lynas Rare Earths Limited and the entities it controlled during the financial year. Ernst & Young Gavin Buckingham Partner 26 August 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 5 From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Lynas Rare Earths Limited for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Gavin Buckingham Partner Perth 26 August 2022
Financial Statements
as at 30 June 2022
Consolidated Statement of Profit or Loss and Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
About this Report
Basis of preparation
A
Earnings for the Year
A.1 Segment revenue and expenses
A.2 Financial income and expenses
A.3 Earnings per share
A.4
Income taxes
B
B.1
Production and Exploration Assets
Property, plant and equipment and
mine development
B.2
Impairment of non-current assets
C
Cash, Borrowings and Capital
C.1 Cash and cash equivalents
C.2 Short term deposits
C.3
Interest Bearing Liabilities
C.4 Financing Facilities
C.5 Contributed Equity
C.6 Reserves
66
66
68
68
71
72
73
77
77
81
83
83
84
84
86
87
88
D Other Assets and Liabilities
D.1 Trade and Other Receivables
D.2
Inventories
D.3 Other non-current assets
D.4 Trade and Other Payables
D.5 Provisions and Employee benefits
E
Other Items
E.1 Contingent Liabilities
E.2 Leases and other commitments
E.3 Auditor Remuneration
E.4 Subsidiaries
E.5 Parent Entity Information
E.6
E.7
Entities under a Deed of Cross
Guarantee
Employee costs and share based
payments
E.8 Other Items
E.9 Subsequent events
62
63
64
65
66
91
91
91
93
94
94
97
97
97
99
99
100
100
102
106
106
61
Lynas Rare Earths Limited | 2022 Annual Report
Financial Statements
Consolidated Statement of Profit or Loss
and Comprehensive Income
For the year ended 30 June 2022
Revenue
Cost of sales
Gross profit
General and administration expenses
Net foreign exchange gain
Other income
Profit from operating activities
Financial income
Financial expenses
Net financial expenses
Profit before income tax
Note
A.1
A.1
A.1
A.2
A.2
2022
A$ ‘000
920,014
(348,381)
2021
A$ ‘000
489,024
(302,242)
571,633
186,782
(42,927)
(27,154)
11,705
229
8,717
1,155
540,640
169,500
4,636
(9,520)
2,927
(14,940)
(4,884)
(12,013)
535,756
157,487
Income tax benefit / (expense)
A.4
5,068
(404)
Profit for the year
540,824
157,083
Other comprehensive income / (loss) for the year net of income tax
that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
16,951
(24,750)
Total other comprehensive income / (loss) for the year, net of
income tax
Total comprehensive income for the year attributable
to equity holders of the Company
16,951
(24,750)
557,775
132,333
Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Note
A.3
A.3
cents per
share
cents per
share
59.95
59.70
18.08
17.99
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
notes to the financial statements.
62
www.LynasRareEarths.com Consolidated Statement
of Financial Position
as at 30 June 2022
Assets
Cash and cash equivalents
Short term deposits
Trade and other receivables
Prepayments
Inventories
Total current assets
Inventories
Property, plant and equipment
Deferred development expenditure
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Liabilities
Interest payable
Trade and other payables
Borrowings
Current tax liability
Employee benefits
Provisions
Lease liabilities
Total current liabilities
Borrowings
Employee benefits
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated losses
Reserves
Note
2022
A$ ‘000
2021
A$ ‘000
C.1
C.2
D.1
D.2
D.2
B.1
B.1
A.4
D.3
D.4
C.3
D.5
D.5
C.3
D.5
D.5
C.5
C.6
965,584
–
109,866
6,712
81,462
580,827
100,000
23,890
6,442
62,888
1,163,624
774,047
851
757,346
48,996
737
11,344
78,734
4,434
607,297
28,347
405
–
63,060
898,008
703,543
2,061,632
1,477,590
1,673
64,932
21,903
5,685
4,206
23,695
1,531
1,773
40,828
20,073
84
3,331
40,874
778
123,625
107,741
164,898
978
124,385
2,131
151,049
696
133,392
1,292
292,392
286,429
416,017
394,170
1,645,614
1,083,420
1,859,598
(174,770)
(39,214)
1,859,598
(715,594)
(60,584)
Total equity attributable to the equity holders of the Company
1,645,614
1,083,420
The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.
63
Lynas Rare Earths Limited | 2022 Annual Report Financial Statements
Consolidated Statement
of Changes in Equity
For the year ended 30 June 2022
s
e
s
s
o
l
l
d
e
t
a
u
m
u
c
c
A
0
0
0
‘
$
A
e
v
r
e
s
e
r
n
o
i
t
a
l
s
n
a
r
t
y
c
n
e
r
r
u
c
n
g
e
r
o
F
i
0
0
0
‘
$
A
l
e
e
y
o
p
m
e
d
e
l
t
t
e
s
y
t
i
u
q
E
e
v
r
e
s
e
r
s
t
fi
e
n
e
b
0
0
0
‘
$
A
e
v
r
e
s
e
r
t
n
a
r
r
a
W
0
0
0
‘
$
A
e
v
r
e
s
e
r
r
e
h
t
O
0
0
0
‘
$
A
l
a
t
i
p
a
c
e
r
a
h
S
0
0
0
‘
$
A
e
t
o
N
Balance at 1 July 2021
1,859,598
(715,594)
(136,521)
54,172
21,765
Other comprehensive
gain for the year
Total profit for the year
Total comprehensive
profit for the year
Employee remuneration
settled through share-
based payments
E.7
–
–
–
–
–
16,951
540,824
–
540,824
16,951
–
–
–
–
–
4,419
–
–
–
–
Balance at 30 June 2022
1,859,598
(174,770)
(119,570)
58,591
21,765
–
–
–
–
–
–
0
0
0
‘
$
A
l
a
t
o
T
1,083,420
16,951
540,824
557,775
4,419
1,645,614
Balance at 1 July 2020
1,424,847
(872,677)
(111,771)
51,708
21,765
4,509
518,381
Other comprehensive
loss for the year
Total profit for the year
Total comprehensive
profit for the year
–
–
–
–
(24,750)
157,083
–
157,083
(24,750)
Issue of shares, net of
issues costs
Conversion of convertible
bonds
Employee remuneration
settled through share-
based payments
413,867
C.5
20,884
E.7
–
–
–
–
–
–
–
–
–
–
–
–
2,464
–
–
–
–
–
–
Balance at 30 June 2021
1,859,598
(715,594)
(136,521)
54,172
21,765
–
–
–
–
(24,750)
157,083
132,333
413,867
(4,509)
16,375
–
–
2,464
1,083,420
The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.
64
www.LynasRareEarths.com
Consolidated Statement
of Cash Flows
For the year ended 30 June 2022
Note
2022
A$ ‘000
2021
A$ ‘000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for discharge of rehabilitation obligation
D.5
Royalties paid
Income taxes paid
855,012
(319,887)
(55,967)
(18,404)
(682)
465,422
(242,348)
–
(7,735)
(274)
Net cash from operating activities
C.1
460,072
215,065
Cash flows from investing activities
Payments for property, plant and equipment and development expenditure
(186,302)
(40,444)
Grants received in relation to property, plant and equipment
Security bonds paid
Security bonds refunded
Interest received
Deposit as collateral for AELB
Redemption of / (Investment in) term deposit
Net cash used in investing activities
Cash flows from financing activities
Interest and other financing costs paid
Proceeds from the issue of share capital
Payments related to the issue of share capital
Repayment of lease liabilities
Repayment of borrowings
6,826
(5,655)
10
3,943
(2,423)
–
(83)
19
2,505
(255)
100,000
(100,000)
(83,601)
(138,258)
(6,556)
–
–
(1,590)
(5,666)
(6,431)
425,324
(11,458)
(1,844)
–
Net cash (used in) / provided from financing activities
(13,812)
405,591
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations (net) on cash held
362,659
580,827
22,098
482,398
101,731
(3,302)
Closing cash and cash equivalents
C.1
965,584
580,827
The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.
65
Lynas Rare Earths Limited | 2022 Annual Report Financial Statements
Notes to the Financial Statements
For the year ended 30 June 2022
ABOUT THIS REPORT
Lynas Rare Earths Limited (the “Company”) is a for-profit company domiciled and incorporated in Australia.
The financial report of Lynas Rare Earths Limited as at and for the year ended 30 June 2022 comprises the
Company and its subsidiaries (together referred to as the “Group”). The financial report was approved by the Board
of Directors (the “Directors”) on 26 August 2022.
The Group is principally engaged in the extraction and processing of rare earth minerals, primarily in Australia and
Malaysia.
The address of the registered office of the Company is Suite 1, 1st Floor 45 Royal Street, East Perth 6004, Australia.
BASIS OF PREPARATION
Statement of compliance
The financial report is a general purpose financial report and has been prepared in accordance with Australian
Accounting Standards (“AASs”) issued by the Australian Accounting Standards Board (“AASB”) and the Corporations
Act 2001.
The financial report also complies with International Financial Reporting Standards and Interpretations (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”).
Going concern
The financial report has been prepared using the going concern assumption.
Basis of measurement
The financial report has been prepared under the historical cost convention, except for the borrowings which are at
amortised cost.
Information as disclosed in the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the current year is for the 12 month period ended
30 June 2022. Information for the comparative year is for the 12 month period ended 30 June 2021.
Consolidation of subsidiaries
Subsidiaries are entities controlled by the Company or the Group. Control is achieved when the Company or Group
has power over the investee, is exposed, or has the rights to variable returns from its involvement with the investee;
and has the ability to use its power to affect its returns. In assessing control, potential voting rights that are presently
exercisable are taken into account. The financial statements of subsidiaries are included in the financial report from
the date control (or effective control) commences until the date that control ceases. As per Note E.4 all entities
within the Group are 100% owned and controlled.
Intra-group balances and unrealised items of income and expense arising from intra-group transactions are elim-
inated in preparing the financial report. Unrealised gains arising from transactions with associates are eliminated
against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the
same manner as gains, but only to the extent that there is no evidence of impairment.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191 issued by the Australian Securities and
Investments Commission, in relation to the “rounding off” of amounts. Amounts in the Directors’ Report and
Financial Report have been rounded off, in accordance with the Instrument, to the nearest thousand dollars, unless
otherwise stated.
66
www.LynasRareEarths.com Currency and foreign exchange
The financial report of the Company and the Group is presented in Australian Dollars (“AUD”), which is both the
Company’s and the Group’s presentation currency.
Items included in the financial report of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the “functional currency”).
Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date
are translated to the functional currency of the respective entities at the exchange rate at that date. Non-monetary
assets and liabilities denominated in foreign currencies that are measured at historical cost are translated to the
functional currency of the respective entities at the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are translated to the functional currency of the
respective entities at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on translation are recognised in the statement of comprehensive income as a
component of the profit or loss.
Foreign operations
The results and financial position of those entities that have a functional currency different from the presentation
currency of the Group are translated into the Group’s presentation currency as follows:
• assets and liabilities for each statement of financial position presented are translated at the closing rate at the
reporting date of the statement of financial position;
income and expense items for each profit or loss item are translated at average exchange rates;
•
•
items of other comprehensive income are translated at average exchange rates; and
• all resulting exchange differences are recognised as a separate component of equity.
As at 30 June 2022, the entities that have a different functional currency to the Group’s presentation currency (AUD)
are Lynas Africa Limited, Lynas USA LLC (USD functional currency) and Lynas Malaysia Sdn Bhd (MYR functional
currency).
Change in functional currency
The functional currency of Lynas Rare Earths Ltd (Parent entity) has been USD. Following the equity raise and
extinguishment of the convertible bonds in the prior year, management exercised its judgement that the func-
tional currency changed. This judgement was influenced by the Parent entity primarily holding investments in its
operating subsidiaries and raising its funding (debt and equity) in Australian dollars (“AUD”).
The change in functional currency to AUD is accounted for prospectively from 31 August 2020. All items are trans-
lated into the new functional currency using the exchange rate at the date of the change. The resultant translated
amounts for non-monetary items are thereafter treated as their historical cost.
Foreign exchange risk management
As a result of the Group’s international operations, foreign exchange risk exposures exist on purchases, assets and
borrowings that are denominated in foreign currencies (i.e. currencies other than the functional currency of each of
the Group’s operating entities). The currencies in which these transactions are primarily denominated are the AUD,
USD and MYR.
The Group takes advantage of natural offsets to the extent possible. Therefore, when commercially feasible, the
Group borrows in the same currencies in which cash flows from operations are generated. Generally the Group
does not use forward exchange contracts to hedge residual foreign exchange risk arising from receipts and
payments denominated in foreign currencies. However, when considered appropriate the Group may enter into
forward exchange contracts to hedge foreign exchange risk arising from specific transactions.
The Group’s primary exposure to foreign exchange risk is on the translation of net assets of Group entities which are
denominated in currencies other than AUD, which is the Group’s presentation currency. The impact of movements
in exchange rates is recognised primarily in the other comprehensive income component of the Group’s statement
of comprehensive income.
Certain subsidiaries within the Group are exposed to foreign exchange risk on purchases denominated in curren-
cies that are not the functional currency of that subsidiary. In these circumstances, a change in exchange rates
67
Lynas Rare Earths Limited | 2022 Annual Report BASIS OF PREPARATION continued
would impact the net operating profit recognised in the profit or loss component of the Group’s statement of
comprehensive income. Details of this exposure is detailed in the capital risks in Section C of this report.
A. EARNINGS FOR THE YEAR
This section includes the results and performance of the Group. It includes segmental information and details
about the Group’s tax position.
A.1
Segment revenue and expenses
AASB 8 Operating Segments (“AASB 8”) requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief Operating Decision Makers
(CODM) in order to allocate resources to the segment and to assess its performance.
At year end, the Group’s CODM are the Board of Directors of the Company, the Chief Executive Officer, the Chief
Financial Officer, the VP Upstream, the VP Downstream, the General Counsel & Company Secretary, the VP
Malaysia, the VP People & Culture and the VP Strategy and Investor Relations. Information reported to the Group’s
CODM for the purposes of resource allocation and assessment of performance currently focuses on the operation of
the Group’s integrated rare earth extraction and process facilities.
The Group has only one reportable segment under AASB 8 being its rare earth operations. The CODM does not
review the business activities of the Group based on geography.
All of the Group’s revenue is derived through the sale of Rare Earth products and is sold to non-Australian
customers.
The accounting policies applied by this segment are the same as the Group’s accounting policies. Results from
operating activities represent the profit earned by this segment without allocation of interest income and expense
and income tax benefit (expense). The CODM assess the performance of the operating segment based on adjusted
EBITDA. Adjusted EBITDA is defined as net profit before income tax expense, net of financial expenses, deprecia-
tion and amortisation and adjusted to exclude certain significant items, including but not limited to such items as
employee remuneration settled through share-based payments, restructuring costs, unrealised gains or losses on
derivatives, gains or losses on the sale of non-strategic assets, asset impairments and write downs.
51% (FY21: 66%) of the Group’s non-current assets are located in Malaysia and the remaining 49% (FY21: 34%) are in
Australia.
Recognition and measurement
Revenue from contracts with customers
Rare Earth Product sales:
The Group derives revenue from the sale of rare earth products, which are governed by a sales contract with
their customers. Revenue is recognised in relation to rare earth sales at the time control transfers to customers
at the date of loading/shipment. Sales made under CIF incoterms, where the Group is responsible for freight and
shipping, are generally recognised at the point in time when the rare earth products are loaded onto the vessel for
shipment. In these sales, the freight and shipping service represents a separate performance obligation to the sale
of the rare earth products. For those sales not made under CIF incoterms, this timing is upon the delivery of the rare
earth products.
Provisionally priced sales:
Certain of the Group’s sales are provisionally priced, where the final price depends on the sale price of products
sold to a third party outside of the Lynas transaction. Adjustments to the sales price occur based on movements in
market prices up to the secondary point of sale. Under AASB 15 any fair value adjustments on receivables subject
to Quotational Pricing (QP) are recognised in other revenue and not included in revenue from contracts with
customers.
68
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Shipping services:
As noted above, a portion of the Group’s rare earth product sales are sold on CIF incoterms, whereby the Group
is responsible for providing freight and shipping services after the date that it transfers control of the rare earth
products to the customer. Under AASB 15, it has been concluded that freight and shipping represent a separate
performance obligation and that the Group acts as principal. As a result, a portion of the transaction price is
required to be allocated to this performance obligation and will be recognised over time on a gross basis as the
services are provided. The Group has concluded that for the FY22 period the amount is insignificant and therefore
not disclosed separately in Note A.1.
Royalties
Obligations arising from royalty arrangements are recognised as current liabilities and included as part of the cost
of goods sold in the statement of comprehensive income as a component of profit or loss. Lynas currently pays
royalties to the Western Australian Department of Minerals and Petroleum for the export of Rare Earth concentrate
to Malaysia.
Financial Income and Expenses
Financial income comprises interest income and gains on derivative financial instruments in respect of investing
activities that are recognised in the statement of comprehensive income as a component of the profit or loss.
Interest income is recognised as it accrues using the effective interest method.
Financial expenses comprise interest expense, impairment losses recognised on financial assets (except for trade
receivables) and losses in respect of financing activities on derivative instruments that are recognised in the
statement of comprehensive income as a component of the profit or loss. All borrowing costs not qualifying for
capitalisation are recognised in the statement of comprehensive income as a component of the profit or loss using
the effective interest method.
69
Lynas Rare Earths Limited | 2022 Annual Report A.1 Segment revenue and expenses continued
For the year ended 30 June 2022
For the year ended 30 June 2021
Rare Earth
operations
Corporate/
Unallocated
Total
Continuing
Operations
Rare Earth
operations
Corporate/
Unallocated
Total
Continuing
Operations
A$’000
A$’000
A$’000
A$’000
A$’000
A$’000
893,162
26,852
920,014
(291,897)
(56,484)
571,633
893,162
472,043
26,852
16,981
920,014
489,024
(291,897)
(56,484)
(239,419)
(62,823)
571,633
186,782
–
–
–
–
–
–
–
–
–
–
472,043
16,981
489,024
(239,419)
(62,823)
186,782
(5,299)
(7,353)
(12,652)
(2,383)
(3,297)
(5,680)
(1,958)
(2,109)
(4,067)
(502)
(2,459)
(2,961)
(17,660)
(8,547)
(26,207)
(9,412)
(9,101)
(18,513)
Business segment reporting
Revenue from contracts with customers
Other revenue:
Revenue adjustments
Total revenue
Cost of sales (excl depreciation)
Cost of sales (depreciation)
Gross profit
Employee and production costs net of
costs recovered through production
Depreciation expenses net of cost
recovered through production
Other general and administration
expenses(1)
Total general and admin expenses
(24,917)
(18,009)
(42,926)
(12,297)
(14,857)
(27,154)
Other income(2)
Net foreign exchange gain
Profit / (loss) before interest and tax
(“EBIT”)
Other financial income
Financial expenses
Profit before income tax
Income tax expense
Profit for the year
–
–
229
11,705
229
11,705
–
–
1,155
8,717
1,155
8,717
546,716
(6,075)
540,641
174,485
(4,985)
169,500
4,636
(9,520)
535,757
5,068
540,824
2,927
(14,940)
157,487
(404)
157,083
EBIT (3)
Depreciation and amortisation
546,716
58,443
(6,075)
2,109
540,641
60,552
174,485
63,325
(4,985)
2,459
169,500
65,784
EBITDA (3)
605,159
(3,966)
601,193
237,810
(2,526)
235,284
Included in EBITDA:
Non-cash employee remuneration
settled through share based payments
comprising:
Share based payments expense
for the year
Other income
–
–
4,419
(229)
4,419
(229)
–
–
2,464
(1,155)
2,464
(1,155)
Adjusted EBITDA (3)
605,159
224
605,383
237,810
(1,217)
236,593
Total assets
Total liabilities
1,118,374
(208,699)
943,247
(207,318)
2,061,632
(416,017)
868,004
(215,350)
609,586
(178,820)
1,477,590
(394,170)
(1) Other general and administration expenses include statutory, consulting, insurance, IT, marketing and general office costs.
(2) Other income in FY21 relates to grants received for submissions for engineering work performed in relation to a Heavy Rare Earths
facility in the U.S. A small additional amount related to the extinguishment of lease liabilities.
(3) EBIT, EBITDA and Adjusted EBITDA are non IFRS measures.
70
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued A.2 Financial income and expenses
Interest income on cash and cash equivalents
Total financial income
Interest expense on financial liabilities:
Interest expense on JARE loan facility
Interest expense on convertible bond facility
Unwinding of effective interest on convertible bond facility
Unwinding of effective interest on JARE loan facility
Non-cash adjustment to financial liabilities
Interest capitalised to qualifying assets
Unwinding of discount on restoration and rehabilitation provision
Interest expense on lease liabilities
Discount unwinding on AELB deposit
Financing transaction costs and fees
Unrealised foreign exchange (loss) / gain on intercompany balance
Total financial expenses
Net financial expenses
For the year ended 30 June
2022
A$ ‘000
4,636
4,636
(5,729)
–
–
(6,754)
977
5,882
(4,026)
(223)
280
(639)
712
2021
A$ ‘000
2,927
2,927
(5,400)
(34)
(134)
(6,146)
995
751
(4,340)
(96)
386
(610)
(312)
(9,520)
(14,940)
(4,884)
(12,013)
71
Lynas Rare Earths Limited | 2022 Annual Report A.3 Earnings per share
Recognition and measurement
Basic earnings per share amounts are calculated by dividing net loss or profit for the year attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share adjusts the amount used in the determination of the basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential ordi-
nary shares and the weighted average number of additional shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares. Potential ordinary shares are treated as dilutive when, and
only when, their conversion to ordinary shares would decrease earnings per share from continuing operations.
The earnings and weighted average number of ordinary shares used in the calculations of basic and diluted
earnings per share are as follows:
Net earnings attributed to ordinary shareholders
Earnings used in calculating basic earnings per share
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
540,824
158,096
540,824
158,096
Net earnings impact of assumed conversions of diluted EPS
–
–
Earnings used in calculating diluted earnings per share
Number of ordinary shares on issue (‘000)
Weighted average number of ordinary shares used in calculating
basic earnings per share (‘000)
Weighted average number of ordinary shares used in calculating
diluted earnings per share (‘000)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
540,824
158,096
902,412
901,079
902,168
868,750
905,898
873,197
cents per
share
cents per
share
59.95
59.70
18.08
17.99
The following dilutive shares are included in the share base for the calculation of dilutive earnings per share:
As at 30 June
2022
‘000
3,731
3,731
2021
‘000
4,335
4,335
Performance rights
Total
72
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued A.4
Income taxes
A.4.1
Income tax expense
Current tax
Current tax expense in respect of the current year
Adjustments recognised in the current year in relation to the current tax in prior years
Deferred tax
Deferred tax (benefit) / expense recognised in the year
Total income tax (benefit) / expense relating to the continuing operations
A.4.2 Reconciliation of income tax to tax expense
Profit before tax for continuing operations
Income tax expense / (benefit) calculated at 30% (2021: 30%)
Add / (deduct):
Effect of expenses that are not deductible and income that is not assessable
in determining taxable profit
Effect of difference in tax rate in subsidiaries and branches
Effect of current year losses not recognised
Tax effect of prior period losses and temporary differences previously unrecognised,
recognised in the current year
Other adjustments
Total current year income tax (benefit) / expense
For the year ended 30 June
2022
A$ ‘000
2021
A$ ‘000
6,276
–
6,276
(11,344)
(5,068)
404
–
404
–
404
For the year ended 30 June
2022
A$ ‘000
535,756
160,727
1,234
(174)
428
2021
A$ ‘000
157,487
47,246
(1,409)
(111)
647
(167,283)
(45,930)
–
(5,068)
(39)
404
73
Lynas Rare Earths Limited | 2022 Annual Report A.4
Income taxes continued
A.4.3 Movements in deferred tax balances
Balance
at 30 June
2021
A$ ‘000
Recognised
in profit
or loss
A$ ‘000
Relating
to equity
A$ ‘000
Recognised
in OCI
A$ ‘000
Balance
at 30 June
2022
A$ ‘000
Temporary differences
Inventory
Development expenditure
Property, plant and equipment
Borrowings
Trade payables
Business related costs
Lease liabilities
Provisions
(894)
(18,351)
3,264
10,453
126
3,584
416
14,846
(86)
(3,773)
(3,433)
5,832
13
(990)
556
(229)
13,444
(2,110)
(Unrecognised) / recognised deferred tax assets
(13,444)
13,444
Net deferred tax asset recognised
–
11,344
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(981)
(22,124)
(169)
16,285
140
2,594
982
14,617
11,344
–
11,344
Balance
at 30 June
2020
A$ ‘000
Recognised
in profit
or loss
A$ ‘000
Relating
to equity
A$ ‘000
Recognised
in OCI
A$ ‘000
Balance
at 30 June
2021
A$ ‘000
Temporary differences
Inventory
Development expenditure
Property, plant and equipment
Borrowings
Trade payables
Business related costs
Lease liabilities
Provisions
(839)
(18,846)
2,244
13,483
109
224
727
14,415
11,517
(55)
495
1,020
(3,030)
17
(77)
(311)
431
–
–
–
–
–
3,437
–
–
(1,510)
3,437
(Unrecognised) / recognised deferred tax assets
(11,517)
1,510
(3,437)
Net deferred tax asset / (liability) recognised
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(894)
(18,351)
3,264
10,453
126
3,584
416
14,846
13,444
(13,444)
–
74
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued A.4.4 Unrecognised deferred tax assets
Deductible temporary differences and unused tax losses for which no
deferred tax assets have been recognised are attributable to the following:
Gross revenue losses
Australia
Malaysia
United States
Malawi
Gross capital losses
Australia
Capital allowances
Malaysia
Deductible temporary differences (tax effected)
Recognition and measurement
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
–
85,251
2,639
196
99,083
160,370
1,919
458
–
2,145
49,003
–
64,881
13,444
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the statement of
comprehensive income as a component of the profit or loss except to the extent that it relates to items recognised
directly in equity or other comprehensive income, in which case it is recognised with the associated items on a net
basis. Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substan-
tially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method of providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts for taxation
purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill,
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled
entities to the extent that they probably will not reverse in the foreseeable future and the Group is in a position to
control the timing of the reversal of the temporary differences. Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted
or substantially enacted at the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time the liability to
pay the related dividend is recognised. Deferred income tax assets and liabilities in the same jurisdiction are offset
in the statement of financial position only to the extent that there is a legally enforceable right to offset current tax
assets and current tax liabilities and the deferred balances relate to taxes levied by the same taxing authority and
are expected either to be settled on a net basis or realised simultaneously.
Tax consolidation
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect
from 1 July 2002 and are therefore taxed as a single entity from that date. The head entity within the tax-consol-
idated group is Lynas Rare Earths Limited. Current tax liabilities and assets and deferred tax assets arising from
unused tax losses and relevant tax credits of the members of the tax-consolidated group are recognised by the
Company (as head entity in the tax-consolidated group).
75
Lynas Rare Earths Limited | 2022 Annual Report A.4
Income taxes continued
A.4.4 Unrecognised deferred tax assets continued
Entities within the tax-consolidated group have entered into a tax sharing agreement with the Company. The tax
sharing agreement entered into between members of the tax-consolidated group provides for the determination
of the allocation of income tax liabilities between the entities should the Company default on its tax payment
obligations or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement is that
each member’s liability for tax payable by the tax-consolidated group is limited to the amount payable to the head
entity under the tax funding arrangement.
KEY ESTIMATES AND JUDGEMENTS
Recognition of deferred tax assets
Significant management judgement is required to determine the amount of deferred tax assets that can
be recognised, based upon the likely timing and the level of future taxable profits, together with future tax
planning strategies. In making the assessment, the Group has given specific due consideration to:
• The pioneer period status (tax holiday) in relation to the Malaysian operations through to 2026, subject to
renewal. This renewal was formally completed during the year.
• Tax losses generated during this period will be utilised prior to the tax exemption being applied, with any
unused losses available for utilisation by the Group once the pioneer period expires.
• Tax losses generated prior to the pioneer period will remain available for use offsetting non-pioneer
profits during the pioneer period for a period of 10 years after incurring the loss. At 30 June 2022, losses in
Malaysia consist of A$121m (MYR 366m) in capital allowances and A$85m (MYR 257m) in business losses.
A$72m (MYR218m) of capital allowance has been utilised to offset a net deferred tax liability arising on
timing differences in Malaysia at 30 June 2022. There is uncertainty if the remaining losses will be utilised.
Tax losses in Australia were utilised during the year and the recognised deferred asset relates to temporary
timing differences within the Australian tax group.
76
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued B. PRODUCTION AND EXPLORATION ASSETS
This section includes information about the recognition, measurement, depreciation, amortisation and impairment
considerations of the core producing and exploration assets of the Group.
B.1 Property, plant and equipment and mine development
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses (if any).
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of property, plant
and equipment acquired in a business combination is determined by reference to its fair value at the date of
acquisition. The cost of self-constructed assets includes the cost of materials and direct labour and any other costs
directly attributable to bringing the asset to a working condition for its intended use. Cost may also include transfers
from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant
and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as
part of the cost of that equipment.
Assets under construction
Assets under construction are transferred to the appropriate asset category when they are ready for their intended
use.
Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of an item of property, plant and equipment
are capitalised until such time as the assets are substantially ready for their intended use. The interest rate used
equates to the weighted effective interest on debt where general borrowings are used or the relevant interest
rate where specific borrowings are used to finance the construction. During FY22, a capitalisation rate of 6.7% was
applied. (FY21: 6.7%).
Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied within that part will flow to the Group and its cost
can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in the statement of comprehensive income as a compo-
nent of the profit or loss as incurred.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all
attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
When the grant relates to an asset, it is netted off against the capitalised cost of the related asset.
Depreciation
Depreciation is recognised in the statement of comprehensive income as a component of the profit or loss or capi-
talised as a component of inventory in the statement of financial position (which is subsequently released to the
profit or loss through the cost of goods sold on the sale of the underlying product) using a method that reflects the
pattern in which the economic benefits embodied within the asset are consumed. Generally, this is on a straight-
line basis over the estimated useful life of each part or component of an item of property, plant and equipment.
The estimated useful lives for the material classes of property, plant and equipment are as follows:
Leasehold land
30 to 99 years
Buildings
5 to 30 years
Plant and equipment
2 to 30 years
Fixtures and fittings
2 to 15 years
Leasehold improvements 3 to 30 years
Motor vehicles
8 years
Rehabilitation assets
20 to 30 years
Depreciation methods, useful lives and residual values are reassessed on an annual basis.
Gains and losses on the disposal of items of property, plant and equipment are determined by comparing the
proceeds (if any) at the time of disposal with the net carrying amount of the asset.
77
Lynas Rare Earths Limited | 2022 Annual Report B.1 Property, plant and equipment and mine development continued
Development expenditure
Once an area of interest has been established as commercially viable and technically feasible, expenditure
other than that relating to land, buildings and plant and equipment is capitalised as development expenditure.
Development expenditure includes previously capitalised exploration and evaluation expenditure, pre-production
development expenditure and other subsurface expenditure pertaining to that area of interest. Costs related to
surface plant and equipment and any associated land and buildings are accounted for as property, plant and
equipment.
Development costs are accumulated in respect of each separate area of interest. Costs associated with commis-
sioning new assets in the period before they are capable of operating in the manner intended by management, are
capitalised. Development costs incurred after the commencement of production are capitalised to the extent they
are expected to give rise to a future economic benefit.
When an area of interest is abandoned or the Directors decide that it is not commercially viable or technically
feasible, any accumulated costs in respect of that area are written off in full in the statement of comprehensive
income as a component of the profit or loss in the period in which the decision to abandon the area is made to the
extent that they will not be recoverable in the future.
Development assets are assessed for impairment if the facts and circumstance suggest that the carrying amount
exceed the recoverable amount. For the purpose of impairment testing, development assets are allocated to the
cash-generating units (“CGUs”) to which the development activity relates.
Deferred stripping
Overburden and other mine waste materials are often removed during the initial development of a mine in
order to access the mineral deposit. This activity is referred to as development or pre-production stripping. The
directly attributable costs associated with these activities are capitalised as a component of development costs.
Capitalisation of development stripping ceases and amortisation of those capitalised costs commences upon
extraction of ore. Amortisation of capitalised development stripping costs occurs on a unit of production basis with
reference to the life of mine of the relevant area of interest.
Removal of waste material normally continues through the life of a mine. This activity is referred to as production
stripping and commences upon the extraction of ore.
Amortisation of development
Amortisation of development is recognised either in the statement of comprehensive income as a component
of the profit or loss or capitalised as a component of inventory in the statement of financial position (which is
subsequently released to the profit or loss through the cost of goods sold on the sale of the underlying product)
on a units of production basis which aims to recognise cost proportionally to the depletion of the economically
recoverable mineral resources. Costs are amortised from the commencement of commercial production.
KEY ESTIMATES AND JUDGEMENTS
Development Expenditure
Development activities commence after project sanctioning by the appropriate level of management and
the Board. Judgement is applied by management in determining when a project is economically viable. In
exercising this judgement, management is required to make certain estimates and assumptions as described
above for capitalised development expenditure. Any such estimates and assumptions may change as new
information becomes available. If, after having commenced the development activity, a judgement is made
that a development asset is impaired, the appropriate amount will be written off to the statement of compre-
hensive income.
Stripping Asset
As with many mining operations similar to Mt Weld, overburden and other mine waste materials are often
removed during the initial development of a mine in order to access the mineral deposit. The extraction of
the ore body itself will also include a waste component extracted during the mining campaign. The costs of
extraction of both these elements form the stripping costs. Judgement is required to identify a suitable alloca-
tion basis to apportion the stripping costs between inventory and any stripping assets for each component.
78
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued The Group considers that the ratio of the expected volume of waste to be stripped for an expected volume of
ore to be mined for a specific component of the ore body, to be the most suitable production measure.
An identifiable component is a specific volume of the ore body that is made more accessible by the stripping
activity.
Pre-Production Stripping
The Group has determined that the overburden removal where no ore is recovered forms part of a pre-pro-
duction stripping asset and has been determined to provide more accessibility to the total ore body and is
amortised on this basis.
Production Stripping ratio
The Group has adopted a policy of deferring production stage stripping costs and amortising them on a
units-of-production basis. Judgement is required in determining the contained ore units for each mining
campaign.
Estimation of mineral reserves and resources – refer to Note B.2
Property, Plant and Equipment
i
t
n
e
m
p
u
q
e
d
n
a
0
0
0
$
’
d
n
a
s
e
r
u
t
x
i
F
s
g
n
i
t
t
fi
0
0
0
$
’
e
s
U
f
o
t
h
g
R
i
s
t
e
s
s
A
0
0
0
$
’
r
e
d
n
u
s
t
e
s
s
A
n
o
i
t
c
u
r
t
s
n
o
c
0
0
0
$
’
n
o
i
t
a
t
i
l
i
b
a
h
e
R
t
e
s
s
a
0
0
0
$
’
s
t
n
e
m
e
v
o
r
p
m
i
l
d
o
h
e
s
a
e
L
0
0
0
$
’
l
a
t
o
T
0
0
0
$
’
Development
Expenditure
t
n
e
m
p
o
e
v
e
D
l
e
r
u
t
i
d
n
e
p
x
e
0
0
0
$
’
/
n
o
i
t
c
u
d
o
r
p
-
e
r
P
t
e
s
s
a
g
n
p
p
i
r
t
S
i
0
0
0
$
’
l
a
t
o
T
0
0
0
$
’
l
t
n
a
p
s
g
n
d
i
l
i
u
B
d
n
a
l
l
d
o
h
e
s
a
e
L
0
0
0
$
’
As at 30 June 2022
Cost
28,891 918,536
8,016
5,494 204,703 200,179 20,404 1,386,223 26,049
39,096
65,145
Accumulated
impairment losses
Accumulated
depreciation
– (188,193)
(391)
–
(258)
–
(7,400) (196,242)
(3,725)
–
(3,725)
(4,102) (389,016)
(6,369)
(2,260)
–
(25,022)
(5,866) (432,635)
(6,939)
(5,485)
(12,424)
Carrying amount
24,789 341,327
1,256
3,234 204,445 175,157
7,138 757,346
15,385
33,611 48,996
Opening cost
28,069 881,322
7,140
3,291
50,886 174,194
19,825 1,164,727 24,889
18,358 43,247
Opening accumulated
impairment and
depreciation
Opening
carrying amount
(3,702) (332,107)
(6,415)
(1,657)
(236)
(18,235)
(12,302) (557,430)
(9,849)
(5,051) (14,900)
24,367 366,439
725
1,634 50,650 155,959
7,523 607,297 15,040
13,307 28,347
Additions
Disposals
–
–
16,804
267
3,082 150,579
– 170,732
828
20,738
21,566
–
–
–
–
–
–
–
Depreciation expense
(289) (50,946)
(248)
(1,497)
(6,348)
(601)
(59,929)
–
–
–
–
–
–
–
(483)
(434)
(917)
–
–
–
–
–
–
–
–
–
–
2,781
488
–
–
–
–
–
21,567
–
–
–
–
–
–
21,567
5,882
–
711
6,249
24
15
604
3,979
216
11,797
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,882
(3,270)
Amortisation expense
Change in rehabilitation
obligations
Capitalised interest
Transfers
Foreign currency
translation
Carrying amount
at 30 June 2022
24,789 341,327
1,256
3,234 204,445 175,157
7,138 757,346
15,385
33,611 48,996
Restrictions on the title of property plant and equipment and development assets are outlined in Note C.3.
79
Lynas Rare Earths Limited | 2022 Annual Report
B.1 Property, plant and equipment and mine development continued
Property, Plant and Equipment
i
t
n
e
m
p
u
q
e
d
n
a
0
0
0
$
’
d
n
a
s
e
r
u
t
x
i
F
s
g
n
i
t
t
fi
0
0
0
$
’
e
s
U
f
o
t
h
g
R
i
s
t
e
s
s
A
0
0
0
$
’
r
e
d
n
u
s
t
e
s
s
A
n
o
i
t
c
u
r
t
s
n
o
c
0
0
0
$
’
n
o
i
t
a
t
i
l
i
b
a
h
e
R
t
e
s
s
a
0
0
0
$
’
s
t
n
e
m
e
v
o
r
p
m
i
l
d
o
h
e
s
a
e
L
0
0
0
$
’
l
a
t
o
T
0
0
0
$
’
Development
Expenditure
t
n
e
m
p
o
e
v
e
D
l
e
r
u
t
i
d
n
e
p
x
e
0
0
0
$
’
/
n
o
i
t
c
u
d
o
r
p
-
e
r
P
t
e
s
s
a
g
n
p
p
i
r
t
S
i
0
0
0
$
’
l
a
t
o
T
0
0
0
$
’
l
t
n
a
p
s
g
n
d
i
l
i
u
B
d
n
a
l
l
d
o
h
e
s
a
e
L
0
0
0
$
’
As at 30 June 2021
Cost
28,069 881,322
7,140
3,291
50,886 174,194
19,825 1,164,727 24,889
18,358
43,247
Accumulated
impairment losses
Accumulated
depreciation
– (182,776)
(377)
–
(236)
–
(7,189) (190,578)
(3,436)
–
(3,436)
(3,702) (332,107)
(6,038)
(1,657)
–
(18,235)
(5,113) (366,852)
(6,413)
(5,051)
(11,464)
Carrying amount
24,367 366,439
725
1,634 50,650 155,959
7,523 607,297 15,040
13,307 28,347
Opening cost
29,705 920,798
7,267
4,873
8,123
186,125
20,977 1,177,868 25,050
18,358 43,408
Opening accumulated
impairment and
depreciation
Opening carrying
amount
(3,617) (487,034)
(6,059)
(2,603)
(258)
(12,825)
(12,382) (524,778)
(9,716)
(4,874)
(14,590)
26,088 433,764
1,208
2,270
7,865 173,300
8,595 653,090 15,334 13,484 28,818
Additions
Disposals
–
–
2,422
–
87
–
–
1,235
42,279
– 46,023
172
Depreciation expense
(289)
(51,846)
(538)
(1,825)
(5,962)
(609)
(61,069)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3,689)
–
–
–
–
751
–
–
–
–
–
–
(3,689)
751
–
–
–
172
–
–
–
–
–
(466)
(177)
(643)
–
–
–
–
–
–
–
–
–
(1,432)
(17,901)
(32)
(46)
(245)
(7,690)
(463)
(27,809)
24,367 366,439
725
1,634 50,650 155,959
7,523 607,297 15,040
13,307 28,347
Amortisation expense
Change in rehabilitation
obligations
Capitalised interest
Foreign currency
translation
Carrying amount
at 30 June 2021
80
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued
B.2
Impairment of non-current assets
The carrying amounts of the Group’s non-financial assets are reviewed at least annually to determine whether
there is any indication of impairment. If any such indicators exist then the asset or CGU’s recoverable amount is
estimated. For intangible assets that have indefinite lives or that are not yet available for use, recoverable amounts
are estimated at least annually and whenever there is an indication that they may be impaired.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its recoverable amount.
A CGU is the smallest identifiable asset group that generates cash flows that are largely independent from other
assets and groups. Impairment losses are recognised in the statement of comprehensive income as a component
of the profit or loss. Impairment losses recognised in respect of a CGU are allocated first to reduce the carrying
amount of any goodwill allocated to the CGU and then to reduce the carrying amount of the other non-financial
assets in the CGU on a pro-rata basis.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In
assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
or CGU. In assessing the fair value less cost to sell, the Company uses a variety of methods and assumptions that
are based on market conditions and risks existing at each reporting date. The methods used to determine fair value
include a discounted future cash flows analysis and adjusted EBITDA (forecasted) multiplied by a relevant market
indexed multiple.
In respect of assets other than goodwill, impairment losses recognised in prior years are assessed at each reporting
date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only
to the extent that the asset’s revised carrying amount will not exceed the carrying amount that would have been
determined net of depreciation or amortisation if no impairment loss had been recognised..
Recognised impairment
There was no impairment expense recognised during FY22 (FY21: nil). There was no reversal of prior period impair-
ment loss recognised in FY22 (FY21: Nil).
KEY ESTIMATES AND JUDGEMENTS
Reserve estimates and mine life
Reserves are estimates of the amount of product that can be economically and legally extracted from the
Group’s mining tenements. In order to calculate reserves, estimates and assumptions are required to be
formulated about a range of geological, technical and economic factors including quantities, grades, produc-
tion techniques, recovery rates, production costs, transportation costs, refining costs, commodity demand,
commodity prices and exchange rates. Estimating the quantity and/or grade of reserves requires the size,
shape and depth of the ore bodies or field to be determined by analysing geological data such as drilling
samples. This process may require complex and difficult geological judgement and calculation to interpret
the data.
As the economic assumptions used to estimate reserves change from period to period, and because addi-
tional geological data is generated during the course of operations, estimates of reserves may change from
period to period. Changes in reported reserves may affect the Group’s financial results and financial position
in a number of ways, including:
• asset carrying values may be affected due to changes in the estimated future cash flows; and
• depreciation and amortisation charges in the statement of comprehensive income may change as result
of the change in the useful economic lives of assets.
Mineral resources and ore reserves are reported in accordance with the Australian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”).
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the
asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating
unit’s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for
81
Lynas Rare Earths Limited | 2022 Annual Report B.2
Impairment of non-current assets continued
an individual asset, unless the asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing recoverable value, the estimated future cash flows are discounted to their present value using a
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. Where applicable, the fair value less costs to sell calculation is based on a 19-year discounted cash flow
(DCF) model. The cash flows are derived from the two-year budget and forecast model that is extrapolated
over 19 years and do not include restructuring activities that the Group is not yet committed to or significant
future investments that will enhance the asset’s performance of the CGU being tested. The recoverable
amount is sensitive to product price movement, volume, operating and capital cost, the discount rate used
for the discounted cash flows model as well as the expected future cash inflows and the growth rate used for
extrapolation purposes.
82
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued C. CASH, BORROWINGS AND CAPITAL
This section includes information about cash and cash equivalents, borrowings and capital position of the Company
at the end of the reporting period.
C.1 Cash and cash equivalents
Cash at bank and on hand
Total cash and cash equivalents
Recognition and measurement
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
965,584
580,827
965,584
580,827
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly
liquid investments with maturities of less than three months.
Fair value and foreign exchange risk
The carrying amount of cash and cash equivalents approximates their fair value.
The Group’s cash and cash equivalents include A$259.9m in currencies other than Australian dollars, primarily
US$92.5m (30 June 2021: US$163.8m) and MYR 337.7m (30 June 2021: MYR 340.6m).
Reconciliation of the profit for the year with the net cash from operating activities
Profit for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Net financial expenses
Gain on disposal of property, plant and equipment and
other non-cash transactions
Income tax (benefit) / expense
Foreign exchange gain included in profit for the year
Change in trade and other receivables
Change in inventories
Change in operating trade and other payables
Change in provisions (excluding additional rehabilitation obligation)
Change in provisions (rehabilitation obligation)
For the year ended 30 June
2022
A$ ‘000
2021
A$ ‘000
540,824
157,083
60,522
4,419
4,884
(230)
(5,068)
(11,705)
(83,923)
(14,678)
20,092
902
(55,967)
65,784
2,464
12,013
(1,155)
404
(8,717)
(22,522)
1,525
7,810
376
–
Net cash from operating activities
460,072
215,065
83
Lynas Rare Earths Limited | 2022 Annual Report C.2 Short term deposits
Short term deposits
Total short term deposits
Recognition and measurement
As at 30 June
2022
A$ ‘000
–
–
2021
A$ ‘000
100,000
100,000
Short term deposits include deposits with a maturity between three and twelve months. These are held in fixed rate
deposit facilities.
C.3
Interest Bearing Liabilities
Current borrowings
JARE loan facility(1)
Total current borrowings
Non-current borrowings
JARE loan facility
Total non-current borrowings
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
21,903
21,903
20,073
20,073
164,898
151,049
164,898
151,049
(1) A payment of interest in respect of the period commencing on 1 January 2016 and ending on 31 December 2016 was deferred until
October 2022 and is classified as a current liability. Furthermore, in line with the repayment schedule below, payments of US$2m is
due on 31 December 2022 and 30 June 2023. These have also been classified as current liabilities at 30 June 2022.
Recognition and measurement
Interest bearing loans and borrowings
Subsequent to initial recognition interest bearing loans and borrowings are measured at amortised cost using the
effective interest method.
KEY ESTIMATES AND JUDGEMENTS
Interest bearing loans and borrowings are measured at amortised cost using the effective interest method.
The effective interest rate is the rate that exactly discounts estimated future cash payments through the
expected life of the financial liability to the amortised cost of the liability. The Group has applied judgement
and determined the appropriate rate for a similar instrument to be 6.5% (FY21: 6.5%). When the Group revises
the estimates of future cash flows, the carrying amount of the financial liability is adjusted to reflect the new
estimate discounted using the original effective rate. Any changes are recognised in the profit or loss.
84
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Fair value and foreign exchange risk
The fair value of borrowings, which have been determined for disclosure purposes, is calculated by discounting the
future contractual cash flows at the current market interest rates that are available for similar financial instruments.
The fair value methodology adopted was categorised as Level 3 in the fair value hierarchy. There has been no
change to the valuation technique during the year. These have been determined as follows:
As at 30 June 2022
As at 30 June 2021
Carrying
amount
A$ ‘000
Fair
value
A$ ‘000
Carrying
amount
A$ ‘000
Fair
value
A$ ‘000
JARE loan facility
186,801
179,248
171,122
171,122
186,801
179,248
171,122
171,122
Terms and debt maturity schedule
As at 30 June 2022
As at 30 June 2021
Currency
Nominal
interest
rate
%
Date of
maturity
Face
value
US$ ‘000
Face
value
A$ ‘000
Face
value
US$ ‘000
Face
value
A$ ‘000
JARE loan facility
USD
2.5% June 2030
152,505(1)
221,703
156,505(1)
208,173
152,505
221,703
156,505
208,173
(1) The face value of the JARE loan facility includes US$141.0m in principal (30 June 2021: US$145.0m) and US$11.5m in interest deferred
payable in October 2022.
85
Lynas Rare Earths Limited | 2022 Annual Report
C.3
Interest Bearing Liabilities continued
Reconciliation of liabilities arising from financing activities
30 June
2021
Cash
flows
Non-cash Movements
Opening
Balance
A$ ‘000
Repay-
ments
A$ ‘000
Effective
Interest
A$ ‘000
Foreign
Exchange
A$ ‘000
Adjust-
ment(1)
A$ ‘000
Addi-
tions(2)
A$ ‘000
Other
A$ ‘000
JARE loan facility
Lease liability
171,122
2,070
(5,666)
(1,590)
6,754
223
15,568
(123)
(977)
–
–
3,082
Total
173,192
(7,256)
6,977
15,445
(977)
3,082
–
–
–
30 June
2022
Closing
Balance
A$ ‘000
186,801
3,662
190,463
(1) Adjustments to the carrying values of the JARE loan during the year ended 30 June 2021 and 2022 relate to changes in the cash flow
profile used to measure the carrying value of the loan.
(2) Other non-cash movements in the lease liability during the year ended 30 June 2022 related to finance leases recognised in line with
AASB 16.
30 June
2020
Cash
flows
Opening
Balance
A$ ‘000
Proceeds
/ (Repay-
ments)
A$ ‘000
Non-cash Movements
Effective
Interest
A$ ‘000
Foreign
Exchange
A$ ‘000
Adjust-
ment(1)
A$ ‘000
Addi-
tions(2)
A$ ‘000
Other(3)
A$ ‘000
30 June
2021
Closing
Balance
A$ ‘000
171,122
JARE loan facility
181,222
Convertible bond
facility (Current)
Lease liability
17,777
2,960
–
–
(1,844)
6,145
(15,250)
(995)
134
96
(1,193)
(377)
–
–
–
–
(16,718)
–
1,235
–
2,070
Total
201,959
(1,844)
6,375
(16,820)
(995)
1,235
(16,718)
173,192
(1) Adjustments to the carrying values of the JARE loan during the year ended 30 June 2021 and 2022 relate to changes in the cash flow
profile used to measure the carrying value of the loan.
(2) Other non-cash movements in the lease liability during the year ended 30 June 2021 related to finance leases recognised in line with
AASB 16.
(3) Other non-cash movements in the convertible bond facility relates to conversions of the convertible bonds.
C.4 Financing Facilities
Japan Australia Rare Earths B.V. (JARE) loan facility
An extension of the JARE loan facility was announced on 27 June 2019. As part of this extension, new terms were
agreed to as detailed below.
The maturity date of the JARE loan facility is 30 June 2030. The interest rate on this facility is 2.5% p.a. at 30 June
2022 (30 June 2021: 2.5% p.a.). Conditions linking the interest rate to the NdPr sales price in the previous facility have
been removed.
Interest liabilities will be paid directly to the lenders at 31 December and 30 June each year. The payment of interest
in respect of the period commencing on 1 January 2016 and ending on 31 December 2016 is deferred to 31 October
2022 (with no penalty, and no additional interest).
86
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued There are a series of fixed repayments in the facility which have replaced the “Cash Sweep” mechanism in the
former facility. The details of the fixed repayments are as follows:
Repayment date
Each half-year from 31 Dec 2021 to 31 Dec 2023
30 June 2024
Each half-year from 31 Dec 2024 to 31 Dec 2027
Each half-year from 30 June 2028 to 30 June 2030
Amount
US$2m on each date
US$5m
US$10m on each date
US$12m on each date
Japan will have the following priority supply rights until 2038:
1. Any fundraising will not hinder Lynas’ ability to support Japanese industries diversifying their rare earths
supply sources, in accordance with the Availability Agreement announced on 30 March 2011.
2. Lynas shall ensure that in the event of competing demands from the Japanese market and a non-Japanese
market for the supply by the Borrower or Lynas Malaysia for NdPr produced from the Lynas Malaysia plant,
the Japanese market shall have priority of supply up to 7,200 tonnes per year subject to the terms of the
Availability Agreement and to the extent that Lynas will not have any opportunity loss.
3. JARE has rights of negotiation with Lynas in priority to non-Japanese market customers for the priority supply
to the Japanese market of additional NdPr and Nd products produced by the Lynas 2025 Project.
4. Lynas will continue to prioritize the needs of Japanese customers for the supply of Heavy Rare Earths products
produced, to the extent possible under any agreement with the U.S.
To date, the JARE loan facility has been secured over all of the assets of the Group, other than the Malawi and
Malaysia assets.
C.5 Contributed Equity
As at 30 June
2022
2021
Number
of shares
‘000
Value of
shares
A$ ‘000
Number
of shares
‘000
Value of
shares
A$ ‘000
Balance at the beginning of the year
901,079
1,859,598
699,209
1,424,848
Issue of shares pursuant to conversion of convertible bonds
Issue of shares pursuant to exercised performance rights
Issue of shares pursuant to equity raising
Costs related to issue of shares
–
1,333
–
–
–
–
–
–
16,203
744
20,884
–
184,923
425,324
–
(11,458)
Closing balance
902,412
1,859,598
901,079
1,859,598
All issued ordinary shares are fully paid and have no par value. The holders of ordinary shares are entitled to receive
dividends as declared from time to time and are entitled to one vote per share. All shares rank equally with regard
to the Group’s residual assets in the event of a wind-up.
Recognition and measurement
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares are shown in equity as
a deduction from the proceeds.
Where equity instruments are reacquired by the Group, for example, as a result of a share buy-back, those instru-
ments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the
statement of comprehensive income and the consideration paid including any directly attributable incremental
costs (net of income taxes) is directly recognised in equity.
87
Lynas Rare Earths Limited | 2022 Annual Report C.6 Reserves
Equity settled employee benefits
Foreign currency translation
Warrant reserve
Balance at 30 June
Nature and Purpose
As at 30 June
2022
A$ ‘000
58,591
(119,570)
21,765
2021
A$ ‘000
54,172
(136,521)
21,765
(39,214)
(60,584)
The equity settled employee benefits reserve relates to performance rights granted by the Group to its employees
under the employee share option plan. Further information about share-based payments to employees is set out in
Note E.7.
Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from
their functional currencies to the Group’s presentation currency are recognised directly in other comprehensive
income and accumulated in the foreign currency translation reserve.
Warrant reserve includes options issued as part of rights issues.
Key Financial and capital risks associated with cash, debt and capital
Exposure to market, credit and liquidity risks arise in the normal course of the Group’s business. The Directors
and management of the Group have overall responsibility for the establishment and oversight of the Group’s risk
management framework.
The Directors have established a treasury policy that identifies risks faced by the Group and sets out policies and
procedures to mitigate those risks. Monthly consolidated financial reports are prepared for the Directors, who
ensure compliance with the Group’s risk management policies and procedures.
Capital risk management
The Directors are responsible for monitoring and managing the Group’s capital structure.
The Directors’ policy is to maintain an acceptable capital base to promote the confidence of the Group’s financiers
and creditors and to sustain the future development of the business. The Directors monitor the Group’s financial
position to ensure that it complies at all times with its financial and other covenants as set out in its financing
arrangements.
In order to maintain or adjust the capital structure, the Directors may elect to take a number of measures including,
for example, to dispose of assets or operating segments of the business, to alter its short to medium term plans in
respect of capital projects and working capital levels, or to re-balance the level of equity and external debt in place.
Capital comprises share capital, external debt and reserves.
Liquidity risk management
Liquidity risk is the risk that the Group will not meet its contractual obligations as they fall due. The Group’s
approach to managing liquidity risk is to ensure that it will always have sufficient liquidity to meet its liabilities as
and when they fall due and comply with covenants under both normal and stressed conditions.
The Group evaluates its liquidity requirements on an on-going basis and ensures that it has sufficient cash on
demand to meet expected operating expenses including the servicing of financial obligations. This excludes the
potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
88
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Interest rate risk management
The Group’s interest rate risk arises from long-term borrowings at both fixed and floating rates and deposits which
earn interest at floating rates. Borrowings and deposits at floating rates expose the Group to cash flows interest rate
risk. The Group’s exposure to interest rate risk is shown below:
30 June
2022
Interest Rate Risk
30 June
2021
Interest Rate Risk
Exposure
1.0%
–1.0%
Exposure
0.5%
–0.5%
Impact on Profit
and Equity
Impact on Profit
and Equity
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
A$ ‘000
Floating rate instruments
Cash and cash equivalents
Other non-current assets
965,584
8,694
9,656
86
(9,656)
580,827
(86)
2,932
Total
974,278
9,742
(9,742)
583,759
2,904
15
2,919
(2,904)
(15)
(2,919)
Maturity analysis of financial liabilities
The table below sets out a maturity analysis for financial liabilities containing principal and interest flows. For
loans outstanding, undiscounted cash flows are presented until contractual final maturity. Interest cash flows are
projected based on the interest rates prevailing on the closing date.
Carrying
Amount
A$ ‘000
Contracted
cash flows
A$ ‘000
Up to and
including
6 months
A$ ‘000
Between
6 months
and up to
1 year
A$ ‘000
Between
1 year and
up to
5 years
A$ ‘000
Over
5 years
A$ ‘000
30 June 2022
JARE loan facility
Lease liabilities
186,801
3,531
247,755
4,483
Total
190,332
252,238
22,216
901
23,117
5,413
709
113,810
1,673
106,316
1,200
6,122
115,483
107,516
30 June 2021
JARE loan facility
Lease liabilities
171,122
2,070
237,178
2,863
20,427
497
5,026
467
63,662
599
148,063
1,300
Total
173,192
240,041
20,924
5,493
64,261
149,363
89
Lynas Rare Earths Limited | 2022 Annual Report C.6 Reserves continued
Foreign exchange risk management
The Group’s foreign exchange risks are detailed in the basis of preparation of these financial reports.
There are two elements of foreign exchange risk. Firstly, the Group holds cash, trade receivables and trade payables
currencies other than the functional currency of the Company in which it is held. Movement in the prevailing
exchange rates have an impact on the Group’s profit and equity. Secondly, the Group’s members are exposed to
foreign exchange risk on the translation of its operations that are denominated in currencies other than AUD. The
Group’s net assets denominated in currencies other than the AUD which have the potential of impacting the other
comprehensive income component of the statement of comprehensive income are:
Foreign Exchange Risk
–10%
10%
Carrying
Amount
Profit
A$ ‘000
Equity
A$ ‘000
Profit
A$ ‘000
Equity
A$ ‘000
As at 30 June 2022
Net exposure of US$ financial assets
Net exposure of A$ financial assets
Net asset exposure – MYR currency
Net asset exposure – US$ currency
As at 30 June 2021
Net exposure of US$ financial assets
Net exposure of A$ financial assets
Net asset exposure – MYR currency
US$
A$
166,213
799
MYR 1,662,590
US$
(2,661)
US$
188,280
A$
1,674
MYR
494,723
Net asset exposure – US$ currency
US$
(1,971)
16,559
243
–
–
(16,559)
(243)
(49,796)
266
18,828
167
–
–
(18,828)
(167)
(14,407)
262
–
–
60,861
(266)
–
–
17,608
(262)
90
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued
D. OTHER ASSETS AND LIABILITIES
This section includes information about the other assets and liabilities position at the end of the period.
D.1
Trade and Other Receivables
Trade receivables
GST / VAT receivables
Other receivables
As at 30 June
2022
A$ ‘000
105,382
3,226
1,258
2021
A$ ‘000
21,729
853
1,308
Total current trade and other receivables
109,866
23,890
The Group’s exposure to credit risk is primarily in its trade receivables. As at 30 June 2022 $2.5m (2021: $1.8m) of trade
receivables were past due but not impaired. The full amount of $2.5m has been received subsequent to 30 June
2022. Where debtors become overdue, the Group maintains regular contact and has a history of collecting trade
receivables in full.
At 30 June 2022, the Group had sales under contract amounting to A$176.1m (US$123.3m) (30 June 2021: A$66.6m
(US$50.0m)) subject to price adjustments. At the date of this report, A$56.6m (US$39.6m) of this amount has been
finalised with minimal price adjustments.
Recognition and measurement
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for instruments with maturities greater than 12 months
from the reporting date, which are classified as non-current assets. The Group’s receivables comprise trade and
other receivables (including related party receivables) which are stated at their cost less impairment losses.
Fair Value and foreign exchange risk
Given the short-term nature of trade receivables, the carrying amount is a reasonable approximation of fair value.
All trade receivables are held in currencies other than the functional currency of the entity receipting them and
therefore exposed to foreign exchange risk.
D.2
Inventories
Raw materials and consumables
Work in progress
Finished goods
Total inventories
Current inventories
Non-current inventories
Total inventories
As at 30 June
2022
A$ ‘000
28,024
44,979
9,310
82,313
81,462
851
82,313
2021
A$ ‘000
25,123
37,662
4,537
67,322
62,888
4,434
67,322
During the year ended 30 June 2022 inventories of $348.4m (2021: $302.2m) were recognised as an expense. All of
which were included in ‘cost of sales’.
91
Lynas Rare Earths Limited | 2022 Annual Report
D.2
Inventories continued
Depreciation recognised in inventories
The Group recognised depreciation on its property, plant and equipment and amortisation on its deferred devel-
opment expenditure and intangible assets for the years ended 30 June 2022 and 2021 respectively in the following
categories:
Recognised
in General and
Administration
Expense
Recognised
in Inventory
Total
2022
A$ ‘000
2021
A$ ‘000
2022
A$ ‘000
2021
A$ ‘000
2022
A$ ‘000
2021
A$ ‘000
Property, plant and equipment
Deferred development expenditure
Intangibles
Total
3,133
694
241
2,210
643
108
56,797
58,892
59,930
61,102
–
–
–
–
694
241
643
108
4,068
2,961
56,797
58,892
60,865
61,853
On the sale of inventory to customers, the component of the depreciation or amortisation expense capitalised
within inventory is reflected in the cost of goods sold in the statement of comprehensive income as a component of
the profit or loss. This was $56.5m in the year ended 30 June 2022 (2021: $62.8m).
Write downs of inventory
During the year ended 30 June 2022, there were no write-downs to net realisable value. (2021: Nil)
Recognition and measurement
Raw materials, work in progress and finished goods
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based either on the
first in first out (“FIFO”) or weighted average principles and includes expenditure incurred in acquiring the invento-
ries and bringing them to their existing location and condition. In the case of manufactured or refined inventories
and work in progress, cost includes an appropriate share of production overheads based on normal operating
capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses. Inventory expected to be sold or consumed within the next 12 months is
classified as current, with amounts expected to be consumed or sold after this time being classified as non-current.
Engineering and maintenance materials
Engineering and maintenance materials (representing either critical or long order components but excluding
rotable spares) are measured at the lower of cost and net realisable value. The cost of these inventories is based on
the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them
to their existing location and condition. Net realisable value is determined with reference to the cost of replacement
of such items in the ordinary course of business compared to the current market prices.
92
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued D.3 Other non-current assets
Security deposits – banking facilities and other, Malaysia
Security deposits – banking facilities and other, Australia
Security deposits – banking facilities and other, USA
Security deposits – AELB, Malaysia
Security deposits – AELB, Australia
As at 30 June
2022
A$ ‘000
3,610
5,084
1
13,387
56,652
2021
A$ ‘000
2,874
58
1
8,208
51,919
78,734
63,060
Deposits to the Malaysian Government’s Atomic Energy Licensing Board (“AELB”) form a component of a total
US$50.0m of instalments due in accordance with the conditions underlying the granting of the Full Operating
Stage Licence to the Group for the Lynas Malaysia plant. The total amount deposited as security via a bond for the
instalments is US$39.0m (all of which is interest earning). A further US$11.0m paid via cash directly to AELB is not
interest earning and has been discounted to a present value of $5.2m (FY21: $4.8m)
Recognition and measurement
Financial assets are classified, at initial recognition and subsequently measured at amortised cost, fair value
through other comprehensive income and fair value through profit or loss. The classification of financial assets at
initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business
model for managing them. With the exception of trade receivables, the Group initially measures a financial asset at
its fair value.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs
to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Financial assets at amortised cost
This category is the most relevant to the Group as all deposits in Note D.3 are classified this way. The Group meas-
ures financial assets at amortised cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows, and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are
subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or
impaired. The Group’s financial assets at amortised cost includes trade receivables, and security deposits included
under other non-current financial assets.
93
Lynas Rare Earths Limited | 2022 Annual Report D.4 Trade and Other Payables
Trade payables
Accrued expenses
Other payables
Total trade and other payables
Current
Non-current
Total trade and other payables
As at 30 June
2022
A$ ‘000
14,388
23,070
27,474
2021
A$ ‘000
11,077
16,485
13,266
64,932
40,828
64,932
–
40,828
–
64,932
40,828
Recognition and measurement
Current trade and other payables are non-interest bearing and are normally settled on 30 to 60 day terms.
Subsequent to initial recognition trade and other payables are stated at amortised cost using the effective interest
method.
Given the short-term nature of trade payables, the carrying amount is a reasonable approximation of fair value.
D.5 Provisions and Employee benefits
Current
Short term employee benefits
Restoration and rehabilitation(1)
Total current
Non-Current
Long term employee benefits
Restoration and rehabilitation
Total non-current
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
4,206
23,695
27,901
978
124,385
3,331
40,874
44,205
696
133,392
125,363
134,088
(1) The current portion of the restoration and rehabilitation provision represents Lynas’ best estimate of the present value of the outflows
relating to the discharge of the rehabilitation obligation relating to residue disposal in Malaysia over the next 12 month period.
Recognition and measurement
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. Where discounting is
used, the increase in the provision for the passage of time is recognised as a financial expense in the statement of
comprehensive income as a component of the profit or loss.
94
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Short-term employee benefits
Short-term employee benefits are expected to be settled within one year and measured on an undiscounted basis
and are expensed in the statement of comprehensive income as a component of the profit or loss as the related
services are provided. A provision is recognised for the amount expected to be paid under short-term cash bonus
plans and outstanding annual leave balances if the Group has a present legal or constructive obligation to pay this
amount as a result of past services provided by the employee and the obligation can be estimated reliably.
Long-term employee benefits
The liability for annual leave and long service leave for which settlement can be deferred beyond 12 months from
the balance date is measured as the present value of expected future payments to be made in respect of services
provided by employees. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting
date on national government bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Incentive compensation plans
The Group recognises a liability and associated expense for incentive compensation plans based on a formula that
takes into consideration certain threshold targets and the associated measures of profitability. The Group recog-
nises a provision when it is contractually obligated or when there is a past practice that has created a constructive
obligation to its employees.
Restoration and Rehabilitation
The activities of the Group give rise to obligations for asset and site restoration and rehabilitation at the Lynas
Malaysia plant and the Mount Weld concentration plant. The key areas of uncertainty in estimating the provisions
for these obligations are set out below. Upon cessation of operations, the site including the processing assets,
ancillary facilities, utilities and the onsite storage facility will be decommissioned and any materials removed from
the location.
The Group has most recently engaged a third party specialist to assist in estimating the restoration and rehabili-
tation provisions at Lynas Malaysia as at 30 June 2022. The Group will continue to review the need to engage third
party specialists periodically over time as the operations continue to develop.
The unwinding effect of discounting of the provision is recognised as a financial expense.
The mining/extraction and refining/processing activities of the Group give rise to obligations for asset and site
rehabilitation. Rehabilitation obligations can include facility decommissioning and dismantling, removal or treat-
ment of waste materials, land rehabilitation and site restoration. The extent of work required and the associated
costs are estimated based on feasibility and engineering studies using current restoration standards and tech-
niques. Provisions for the cost of each rehabilitation programme are recognised at the time that the environmental
disturbance occurs.
Rehabilitation provisions are initially measured at the expected value of future cash flows required to rehabilitate
the relevant site, discounted to their present value. The value of the provision is progressively increased over time as
the effect of discounting unwinds. When provisions for rehabilitation are initially recognised, the corresponding cost
is capitalised as an asset, representing part of the cost of acquiring the future economic benefits of the operation.
The capitalised cost of rehabilitation activities for the Group’s mining operations and refining operations are
recognised as a component of property, plant and equipment. Amounts capitalised are depreciated or amortised
accordingly.
At each reporting date the rehabilitation liability is re-measured to account for any new disturbance, updated cost
estimates, changes to the estimated lives of the associated operations, new regulatory requirements and revisions
to discount rates. Changes to the rehabilitation liability are added or deducted from the related rehabilitation asset
and amortised accordingly.
95
Lynas Rare Earths Limited | 2022 Annual Report D.5 Provisions and Employee benefits continued
Restoration and Rehabilitation
Balance at the beginning of the year
Provisions made during the year
Provisions paid during the year
Changes to inflation and discounts rates
Effects of foreign exchange movement
Unwinding of discount on provision
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
174,266
30,804
(55,967)
(9,183)
4,134
4,026
181,604
9,159
–
(12,848)
(7,989)
4,340
Balance at 30 June
148,080
174,266
KEY ESTIMATES AND JUDGEMENTS
Restoration and rehabilitation expenditure
The Group’s accounting policy for its restoration and rehabilitation closure provisions requires significant esti-
mates and assumptions such as: requirements of the relevant legal and regulatory framework; the magnitude
of possible contamination; and the timing, extent and costs of required closure and rehabilitation activity.
These uncertainties may result in future actual expenditure differing from the amounts currently provided.
The provision recognised is periodically reviewed and updated based on the facts and circumstances available
at the time. Changes to the estimated future costs for operating sites are recognised in the statement of
financial position by adjusting both the closure and rehabilitation asset and the provision.
Lynas Malaysia production residues
On 30 January 2020, the Group announced that The State Government of Pahang has issued its consent to a
site for the Permanent Disposal Facility (PDF) for Water Leach Purification (WLP) residue. In additional Lynas
Malaysia has appointed Gading Senggara Sdn Bhd (“GSSB”) as the contractor to manage the entire PDF
project. The total cost of this project will be MYR 400m (A$ 128.4m). The provision for restoration and rehabili-
tation has been updated to reflect the present value of the obligation that exists at 30 June 2022. Those costs
expected to be due within 12 months have been reflected as current. The unwinding effect of discounting of
the provision is recognised as a finance cost.
Payments of $56.0m (FY2021: nil) in relation to the discharge of rehabilitation liabilities are recognised in the
Statement of Cash Flows as an operating cash outflow.
The Group has included its best estimate of the timing of these costs within the provision for restoration and
rehabilitation at 30 June 2022.
Key Financial risks associated with other assets and liabilities
Credit risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers and related
entities. The Group’s exposure to credit risk is primarily in its trade and other receivables and is influenced mainly by
the individual characteristics of each customer. Demographically there are no material concentrations of credit risk.
Cash and cash deposits are held in banks and financial institutions with A+ credit ratings.
Management believes that the Group’s trade and other receivables are collectible in full, based on historical
behaviour and extensive analysis of customer credit risk, including underlying customers’ credit ratings if they are
applicable.
96
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued E. OTHER ITEMS
This section includes information on items which require disclosure to comply with Australian Accounting Standards
and the Australian Corporations Act 2001. This section includes group structure information and other disclosures.
E.1 Contingent Liabilities
An amount of US$39.0m (FY21: US$39.0m) has been deposited via a bond for instalments required in accordance
with the conditions underlying the granting of the Full Operating Stage Licence to the Group for the LAMP in
Malaysia. Should criteria as part of this grant not continue to be met, this amount may be utilised to settle obliga-
tions. The Group has determined that the possibility of a material outflow related to these contingent liabilities is
remote. Refer to Note D.3 for details of bonds.
Litigation and legal proceedings
As a result of its operations the Group has certain contingent liabilities related to certain litigation and legal
proceedings. The Group has determined that the possibility of a material outflow related to these contingent
liabilities is remote.
Security and guarantee arrangements
Certain members of the Group have entered into guarantee and security arrangements in respect of the Group’s
indebtedness as described in Note E.6.
E.2 Leases and other commitments
AASB 16 Leases
The accounting policies of the Group upon adoption of AASB 16 are as follows:
Right of Use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commence-
ment date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the
leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis
over the shorter of its estimated useful life and the lease term (where the entity does not have a purchase option at
the end of the lease term). Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including in-sub-
stance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or
a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties
for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease
payments that do not depend on an index or a rate are recognised as an expense in the period on which the event
or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses
the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not
readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease
payments or a change in the assessment to purchase the underlying asset.
Determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered
by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option
to terminate the lease, if it is reasonably certain not to be exercised. The Group applies judgement in evaluating
whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create
an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the
97
Lynas Rare Earths Limited | 2022 Annual Report E.2 Leases and other commitments continued
lease term if there is a significant event or change in circumstances that is within its control and affects its ability to
exercise (or not to exercise) the option to renew (e.g. a change in business strategy).
Short term leases and low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equip-
ment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value assets recognition exemption (i.e. below US$5,000/
A$7,150). Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term. No leases meeting the low-value criteria were recognised at 30 June 2021 or
30 June 2022.
Exploration commitments
Less than one year
Between one and five years
More than five years
Total
As at 30 June
2022
A$ ‘000
412
1,404
1,013
2,829
2021
A$ ‘000
394
1,638
1,291
3,323
These include commitments relating to tenement lease rentals and the minimum expenditure requirements of
the Western Australia Department of Mines and Petroleum attaching to the tenements and are subject to re-nego-
tiation upon expiry of the exploration leases or when application for a mining licence is made. These are necessary
in order to maintain the tenements in which the Group and other parties are involved. All parties are committed to
meet the conditions under which the tenements were granted in accordance with the relevant mining legislation.
Capital commitments
Less than one year
Total
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
169,145
82,479
169,145
82,479
At 30 June 2022 and 30 June 2021 the capital commitments primarily related to the Lynas Kalgoorlie project.
98
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued E.3 Auditor Remuneration
The following items of expenditure are included in general and administration expenses:
For the year ended 30 June
2022
A$
2021
A$
Auditor’s remuneration to Ernst & Young (Australia), comprising:
Fees for auditing the statutory financial report of the parent covering the group
233,347
228,792
Fees for other services
Tax Services
Other assurance and agreed upon procedures
Advisory Services
4,370
–
–
5,725
58,650
67,088
Total auditor’s remuneration Ernst & Young (Australia)
237,717
360,255
Auditor’s remuneration to Ernst & Young (other locations), comprising:
Fees for auditing the financial report of any controlled entities
131,155
136,548
Fees for other services
Tax Services
1,168
20,480
Total auditor’s remuneration Ernst & Young (other locations)
132,323
157,028
Total auditor’s remuneration
370,040
517,283
Other tax service fees paid to EY Australia and other locations in FY2021 and FY2020 relate to completion of tax
returns for expatriate employees. Other assurance, agreed upon procedures and advisory services paid to EY
Australia relate to due diligence and review work in relation to the capital raising that took place in August 2020.
E.4 Subsidiaries
Name of Group entity
Principal activity
Ownership interest
as at 30 June
Country of
incorporation
2022
2021
Lynas Malaysia Sdn Bhd
Operation and development of advanced
material processing plant
Malaysia
100%
100%
Lynas Services Pty Ltd*
Provision of corporate services
Mount Weld Holdings Pty Ltd*
Holding company
Mount Weld Mining Pty Ltd*
Development of mining areas of interest
and operation of concentration plant
Australia
Australia
Australia
Lynas Kalgoorlie Pty Ltd*
Development of operations in Kalgoorlie
Australia
Lynas Africa Holdings Pty Ltd*
Holding company
Lynas Africa Ltd
Lynas USA LLC
Mineral exploration
Development of processing
opportunities in USA
Australia
Malawi
USA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
*
Entity has entered into a deed of cross guarantee with Lynas Rare Earths Limited pursuant to ASIC Instrument 2016/785 and is relieved
from the requirement to prepare and lodge an audited financial report, as discussed in Note E 6. Entity is also a member of the tax-
consolidated group.
99
Lynas Rare Earths Limited | 2022 Annual Report E.5 Parent Entity Information
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Share capital
Accumulated deficit
Reserves
Total shareholders’ equity
Loss of the Company
Total comprehensive loss of the parent Company
As at 30 June
2022
A$ ‘000
2021
A$ ‘000
128,266
139,729
1,222,661
1,223,788
(24,052)
(21,486)
(186,801)
(172,895)
1,035,860
1,050,893
1,859,598
(1,138,600)
314,862
1,859,598
(1,119,822)
311,117
1,035,860
1,050,893
(18,778)
(3,874)
(18,778)
(3,874)
E.6 Entities under a Deed of Cross Guarantee
Pursuant to ASIC Instrument 2016/785 (as amended) dated August 13, 1998, the wholly-owned Australian subsidi-
aries of Lynas Rare Earths Limited are relieved from the Corporations Act 2001 requirements for preparation, audit
and lodgement of financial reports, and Director’s reports.
It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross
Guarantee. The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt
in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a
winding up event occurs under any other provision of the Act, the Company will only be liable in the event that after
six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event
that the Company is wound-up. The subsidiaries in addition to the Company subject to the deed are specified in
Note E.4.
A statement of comprehensive income and statement of financial position, comprising the Company and
controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of
Cross Guarantee is presented as follows:
100
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Statement of Financial Position
Cash and cash equivalents
Short term deposits
Trade and other receivables
Inventories
Total current assets
Inventories
Property, plant and equipment
Deferred exploration, evaluation and development expenditure
Investments in subsidiaries
Other assets
Total non-current assets
Total assets
Trade and other payables
Interest payable
Borrowings
Employee benefits
Intercompany payables
Total current liabilities
Provisions
Employee benefits
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Share capital
Accumulated deficit
Reserves
Total equity
As at 30 June
2022
A$ ‘000
763,105
–
162,414
24,183
2021
A$ ‘000
290,114
100,000
507,789
21,448
949,702
919,351
851
126,957
48,996
375,080
72,428
4,434
151,173
28,347
375,080
51,977
624,312
611,011
1,574,419
1,530,362
24,157
1,673
21,903
3,288
168,525
12,435
1,773
20,073
2,846
275,761
219,546
312,888
48,286
2,023
167,284
45,775
1,114
151,049
217,593
197,937
437,679
510,825
1,136,740
1,019,537
1,859,597
(888,002)
165,145
1,859,597
(1,006,439)
166,379
1,136,740
1,019,537
101
Lynas Rare Earths Limited | 2022 Annual Report E.6 Entities under a Deed of Cross Guarantee continued
Statement of Comprehensive Income
Revenue
Cost of sales
Gross profit
Other income / (expenses)
Foreign exchange losses
General and administration expenses net of recoveries
Profit from operating activities
Financial income
Financial expenses
Net financial expenses
Profit before income tax
Income tax benefit / (expense)
As at 30 June
2022
A$ ‘000
248,028
(106,379)
2021
A$ ‘000
132,537
(81,657)
141,649
50,880
(124)
(3,592)
(20,731)
117,201
8,321
(12,255)
(3,934)
113,267
5,170
68
–
(12,628)
38,320
1,249
(11,534)
(10,285)
28,035
(1)
Profit for the year from continuing operations
118,437
28,034
Other comprehensive loss, net of income tax
Exchange differences on foreign currency transactions
Total other comprehensive income for the year, net of income tax
–
–
9,196
9,196
Total comprehensive income for the year
118,437
37,230
E.7 Employee costs and share based payments
The following items are gross employee costs before recoveries included in general and administration expenses:
Wages and salaries
Superannuation and pension contributions
Employee remuneration settled through share-based payments
Other
Total employee costs
For the year ended 30 June
2022
A$ ‘000
50,942
4,474
4,419
1,003
2021
A$ ‘000
45,790
3,715
2,464
1,051
60,838
53,020
102
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Share-based remuneration benefits are provided to employees via a variety of schemes which are further set out
below.
The fair values of the performance rights granted under these various schemes are recognised as an employee
benefit expense with a corresponding increase in equity. The fair value is measured at the grant date and recog-
nised over the period during which the employees become unconditionally entitled to the performance rights.
The fair value at grant date is independently determined using a performance right pricing model that takes into
account the exercise price, the term of the performance right, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for
the term of the performance right.
The fair value of the performance right granted is measured to reflect the expected market vesting conditions,
but excludes the impact of any non-market vesting conditions (for example, profitability and production targets).
Non-market vesting conditions are included in assumptions about the number of performance rights that are
expected to become exercisable. At the end of each reporting period, the Group revises its estimates of the number
of performance rights that are expected to become exercisable. The employee benefits expense recognised
each period takes into account the most recent estimate. The impact of the revision to original estimates, if any,
is recognised in the statement of comprehensive income as a component of profit or loss, with a corresponding
adjustment to equity.
Key management personnel compensation
The aggregate compensation made to the Directors and other members of KMP of the Group is set out below:
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share based payments
For the year ended 30 June
2022
A$
5,491,675
59,876
431,768
3,087,956
2021
A$
5,312,122
96,834
240,278
1,692,416
Total compensation paid to key management personnel
9,071,275
7,341,650
The compensation of each member of the KMP of the Group for the current and prior year is set out within the
Remuneration Report. All transactions with these related parted have been considered and included in the report.
The share-based payments amount represents the impact of amortising the accounting value of options and
performance rights over their vesting periods including the impact of forfeitures recognised during the period.
At times, a negative value may be presented which results from the forfeitures recognised in the period (which may
relate also to earlier periods) are greater than the accounting expense for the current portion of the vesting period.
Employee share options and performance rights
The Group has established an employee share plan whereby, at the discretion of Directors, performance rights may
be granted over the ordinary shares of the Company for the benefit of Directors, Executives and certain employees
of the Group. The performance rights are granted in accordance with performance guidelines established by
the Nomination, Remuneration and Community Committee. Other than short term incentives and Strategic
Performance Rights, each performance right is convertible into one ordinary share of the Company during the two
years following the vesting date, which is the third anniversary of the grant date. The performance rights hold no
voting or dividend rights and are not transferrable.
Performance rights are granted for the benefit of Key Management Personnel (“KMP”) and other selected
employees to provide greater alignment to our strategic business objectives. KMP are those people who have
authority and responsibility for planning, directing and controlling the major activities of the Group, directly or
indirectly, including any Executive Director of the Group and the Executives. At year end, the Executives include
the Chief Executive Officer, the Chief Financial Officer, the Group’s General Counsel & Company Secretary, Vice
President – Upstream, Vice President – Downstream, Vice President – Malaysia.
103
Lynas Rare Earths Limited | 2022 Annual Report E.7 Employee costs and share based payments continued
Movements in employee performance rights during the year
For the year ended 30 June 2022
For the year ended 30 June 2021
Number of
performance
rights
‘000
Weighted
average
exercise price
A$
Number of
performance
rights
‘000
Weighted
average
exercise price
A$
Balance at beginning of year
Granted during the year
Exercised during the year
Forfeited during the year
Balance at end of year
4,678,526
727,593
(1,332,975)
(342,588)
3,730,556
Vested and exercisable at end of year
429,045
0.00
0.00
0.00
0.00
0.00
0.00
4,461,537
1,408,092
(743,643)
(447,460)
4,678,526
1,279,101
0.00
0.00
0.00
0.00
0.00
0.00
During the year ended 30 June 2022 the Group recognised net share based payment expense of $4.4m (2021: $2.5m)
within the profit and loss component of the statement of comprehensive income. The employee performance
rights outstanding at the end of the year had nil weighted average exercise price and a weighted average remaining
contractual life of 298 days (FY21: 339 days). The performance rights exercised during the year had a weighted
average share price on exercise date of $ 6.99 (FY21: $1.91).
Performance rights granted in the period
For the CEO, other Executive KMP and Lynas Leadership Team, two vesting conditions apply to the LTI grants made
during FY22:
• Relative Total Shareholder Return (TSR)
• Lynas 2025 Project Target
Relative TSR –
50% weighting
Relative TSR is assessed over a three year period from 1 July 2021 to 30 June 2024, relative to other
companies in the ASX200 index (Peer Group Companies). For any performance rights to vest under
the TSR vesting condition, Lynas’ performance must be equal to or greater than the 51% percentile of
Peer Group Companies.
The percentage of the performance rights that may vest is determined as follows:
Lynas TSR Ranking across the TSR Period
Proportion of Performance Rights that vest
Below 51st percentile
At the 51st percentile
0%
50%
Between the 51st percentile and
the 76th percentile
Between 50% and 100% as determined on a
linear basis (rounded to the nearest 5%)
At or above 76th percentile
100%
Lynas 2025
Project Target –
50% weighting
The Lynas 2025 Project Target vesting condition is that by 30 June 2024:
•
the Lynas Kalgoorlie plant achieves capacity to sustain operations at its nameplate
capacity (70% weighting); and
• development of capacity to separate heavy rare earths (30% weighting).
In accordance with the Group’s policy that governs trading of the Company’s shares by Directors and employees,
Directors and employees are not permitted to hedge their options or performance rights before the options vest.
The performance rights granted during the financial year had a weighted average fair value of $7.008 (2021: $2.514)
and were priced using volume-weighted average share prices, Monte Carlo and Binomial valuation methodologies.
104
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Where relevant the expected life used in the model has been adjusted based on management’s best estimate
for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions
attached to the option), and behavioural considerations. Expected volatility is based on the historical share price
volatility over the past three years and peer volatility.
PR’s issued to employees other than CEO
PR’s issued to CEO
Series BK
Series BL
Series BM
Series BH
Series BI
Series BJ
Grant date
5 day VWAP
Exercise price
Dividend yield
Expected volatility
Risk-free Rate
Expiry date
20 Sept 2021
$7.60
$0.00
Nil
61.5%
0.17%
31 Aug 2022
20 Sept 2021
$7.60
$0.00
Nil
61.5%
0.17%
31 Aug 2026
20 Sept 2021
$7.60
$0.00
Nil
61.5%
0.17%
31 Aug 2026
29 Nov 2021
$8.57
$0.00
Nil
59.6%
0.92%
31 Aug 2022
29 Nov 2021
$8.57
$0.00
Nil
59.6%
0.92%
31 Aug 2026
29 Nov 2021
$8.57
$0.00
Nil
59.6%
0.92%
31 Aug 2026
Performance rights still to vest or yet to expire
Performance rights are issued on the same terms as options, except there is no consideration payable on exercise.
The following table lists any performance rights which are still to vest, or have yet to expire.
Series
Grant date
Number
Date vested
and exercisable
Expiry date
Exercise
price
28 November 2017
28 November 2017
27 November 2018
26 August 2019
26 August 2019
26 August 2019
26 November 2019
26 November 2019
26 November 2019
09 September 2020
09 September 2020
26 November 2020
26 November 2020
20 September 2021
20 September 2021
20 September 2021
29 November 2021
29 November 2021
29 November 2021
AU
AV
BC
BE
BF
BG
BE(1)
BF(1)
BG(1)
BI
BJ
BI(2)
BJ(2)
BK
BL
BM
BN(3)
BO(3)
BP(3)
Total
127,567
154,044
147,433
131,014
638,433
157,216
136,435
136,435
163,722
275,091
517,861
208,856
208,856
154,445
186,733
186,733
50,410
74,636
74,636
3,730,556
28 August 2020
28 August 2020
28 August 2021
26 August 2022
26 August 2022
26 August 2022
26 August 2022
26 August 2022
26 August 2022
09 September 2023
09 September 2023
09 September 2023
09 September 2023
31 August 2022
31 August 2024
31 August 2024
31 August 2022
31 August 2024
31 August 2024
28 August 2022
28 August 2022
28 August 2023
26 August 2024
26 August 2024
26 August 2024
26 August 2024
26 August 2024
26 August 2024
09 September 2025
09 September 2025
09 September 2025
09 September 2025
31 August 2024
31 August 2026
31 August 2026
31 August 2024
31 August 2026
31 August 2026
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
Value per
performance
right at
grant date
$2.060
$1.620
$1.463
$2.340
$2.340
$1.660
$2.290
$2.290
$1.630
$1.790
$2.400
$2.500
$3.560
$7.600
$5.230
$7.600
$8.570
$5.680
$8.570
(1) Performance rights relates to the CEO in series BE to BG were approved by the Board on 26 August 2019, subject to approval at the
AGM. These performance rights were subsequently approved at the AGM on 26 November 2019.
(2) Performance rights relates to the CEO in series BH to BJ were approved by the Board on 09 September 2021, subject to approval at the
AGM. These performance rights were subsequently approved at the AGM on 26 November 2020.
(3) Performance rights relates to the CEO in series BN to BP were approved by the Board on 20 September 2021, subject to approval at the
AGM. These performance rights were subsequently approved at the AGM on 29 November 2021.
105
Lynas Rare Earths Limited | 2022 Annual Report E.8 Other Items
New and revised standards and interpretations
Standards and Interpretations affecting amounts reported
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with
those of the previous financial year, except for the adoption of new standards and interpretations effective as of
1 July 2020.
Several amendments apply for the first time in the current year. As required, the nature and effect of the changes of
these new standards has been disclosed throughout the report.
Standards and Interpretations in issue not yet adopted
No Australian Accounting Standards issued but not yet mandatory for the financial year ending 30 June 2022 have
had a material impact on the Group for the year ended 30 June 2022.
E.9 Subsequent events
On 3 August 2022, Lynas announced an approximately $500m project to expand capacity at the Mt Weld mine and
concentration plant to meet accelerating market demand for rare earth materials.
With the exception of the above, there have been no other events subsequent to 30 June 2022 that would require
accrual or disclosure in this financial report.
106
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Mineral Resources and
Ore Reserves
as at 30 June 2022
1. MT WELD RARE EARTH DEPOSIT ORE RESERVES 2022
The Ore Reserve estimation for the Mt Weld Rare Earth Deposit is shown in Table 1.
TABLE 1: MT WELD RARE EARTH DEPOSIT ORE RESERVES 2022
JORC CLASSIFICATION
Ore Reserves within Pit boundary
MILLION
TONNES
TREO
%
CONTAINED REO
‘000 TONNES
Proved
Probable
Designed Pit Total
On Stockpiles
Proved
Probable
Stockpiles Total
Total Ore Reserves
Proved
Probable
Total
13.1
5.0
18.1
0.6
0.0
0.6
13.7
5.0
18.6
8.3
7.4
8.1
12.0
0.0
12.0
8.4
7.4
8.2
1,092
369
1,461
66
0
66
1,158
369
1,527
* TREO = Total Rare Earth Oxides (La2O3, CeO2, Pr6O11, Nd2O3, Sm2O3, Eu2O3, Gd2O3, Tb4O7, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3) + Yttrium (Y2O3).
Totals may not balance due to rounding of figures
Note:
The Ore Reserves for the Mt Weld Rare Earth Deposit is as of June 30, 2022. The 2022 Ore Reserve update is based
upon depletion of the in-situ ore reserves by mining activities between 1 July 2021 and 30 June 2022. Minor changes
to the stockpiles occurred as a result of processing. The stockpiles were estimated using survey volumes of the
stockpiles and grades assigned to the stockpiles by the grade control process. The grade control process is carried
out by Mr Thomas Leggo, an employee of Lynas Rare Earths. The surveys have been carried out by Mr Bradley
Hughes, an employee of Lynas Rare Earths. Mr Steve Lampron, (Ragnarok Mining Pty Ltd) has carried out a review
and audit of these figures and found them to fall within expected error deviations. The company confirms that
all material assumptions and technical parameters underpinning the estimated Ore Reserves set out in the ASX
announcement dated August 6, 2018 continue to apply and have not materially changed.
107
Lynas Rare Earths Limited | 2022 Annual Report Mineral Resources and Ore Reserves
2. MT WELD RARE EARTH DEPOSIT MINERAL RESOURCES 2022
The Mineral Resource estimation for the Mt Weld Rare Earth Deposit is shown in Table 2, reported above a cut-off of
2.5% Total Rare Earth Oxides (TREO).
TABLE 2: MT WELD RARE EARTH DEPOSIT MINERAL RESOURCES 2022
JORC CLASSIFICATION
MILLION
TONNES
TREO
%
CONTAINED REO
‘000 TONNES
Insitu
Measured
Indicated
Inferred
Subtotal
On Stockpiles
Measured
Subtotal
Total Mineral Resources
Measured
Indicated
Inferred
Total
16.5
11.8
25.9
54.2
0.5
0.5
17.0
11.8
25.9
54.7
7.5
5.4
3.6
5.2
12
12
7.6
5.4
3.6
5.3
1,241
633
937
2,812
66
66
1,307
633
937
2,877
* TREO = Total Rare Earth Oxides (La2O3, CeO2, Pr6O11, Nd2O3, Sm2O3, Eu2O3, Gd2O3, Tb4O7, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3) + Yttrium (Y2O3).
Totals may not balance due to rounding of figures.
Mineral Resources have been reported above a cut-off of 2.5% TREO. The Mineral Resources are inclusive of Ore Reserves.
Note:
The Mineral Resource estimation for the Mt Weld Rare Earth Deposit is as of June 30, 2022. The company confirms
that all material assumptions and technical parameters underpinning the estimated Mineral Resources set out in
the ASX announcement dated August 6, 2018 continue to apply and have not materially changed. The exceptions
are the inclusion of stockpiled material as a Measured Resource.
3. NIOBIUM RICH RARE METALS MINERAL RESOURCES
The Mineral Resource estimation for the niobium rich rare metals prospect referred to as the Niobium Rich Rare
Metals Project is shown in Table 3. The Rare Metals Project is located at Mt Weld.
TABLE 3: CLASSIFICATION OF MINERAL RESOURCES FOR THE NIOBIUM RICH RARE METALS PROJECT
MILLION
TONNES
Ta2O5
%
Nb2O5
%
TLnO
%
ZrO
%
0
1.5
36.2
37.7
0
0.037
0.024
0.024
0
1.4
1.06
1.07
0
1.65
1.14
1.16
0
0.32
0.3
0.3
P2O5
%
0
8.9
7.96
7.99
Y2O3
%
0
0.1
0.09
0.09
TiO2
%
0
5.8
3.94
4.01
CATEGORY
Measured
Indicated
Inferred
Total
108
www.LynasRareEarths.com Notes:
1. All figures are percentages. Ta2O5 Tantalum Oxide, Nb2O5 Niobium Oxide, TLnO Total Rare Earth Oxide,
ZrO zirconia, P2O5 Phosphate, Y2O3 yttria, TiO2 titanium oxide.
2. The Mineral Resource estimation for the niobium rich rare metals is as per ASX announcement dated 6 October
2004. Lynas Corp confirms that all material assumptions and technical parameters underpinning the estimated
Mineral Resources continue to apply and have not materially changed. Figures in the table may not sum due to
rounding.
There have been no changes to the Niobium Rich Rare Metals Project Mineral Resource since the previous
reporting period.
Note on governance arrangements and internal controls:
All Lynas Mineral Resource and Ore Reserve estimations are compiled by experienced competent persons who
are engaged as independent external consultants to Lynas. The relevant Competent Person ensures that all
aspects of the Mineral Resource estimations or the Ore Reserve estimations (as applicable) meet the JORC code
requirements.
COMPETENT PERSON’S STATEMENTS – MINERAL RESOURCES
The information in this report that relates to the 2022 Mineral Resources is based on information compiled by
Ms Elizabeth Haren and Dr Andrew Scogings. Ms Haren is Associate Principal Consultant at Snowden and a
Member and Chartered Professional of the Australian Institute of Mining and Metallurgy and a Member of the
Australian Institute of Geoscientists. Dr Scogings is Associate Executive Consultant at a Snowden is a Member of
the Australian Institute of Geoscientists and is a Registered Professional Geoscientist (RP Geo. Industrial Minerals).
Ms Haren and Dr Scogings have sufficient experience relevant to the style of mineralisation and type of deposit
under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012
Edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources, and Ore Reserves.
Ms Haren and Dr Scogings consent to disclosure of information in this report in the form and context in which it
appears.
The information in this report that relates to the Niobium Rich Rare Metals Project is based on information
compiled by Mr Brendan Shand. Mr Shand is a consultant geologist to Lynas Rare Earths. Mr Shand is a Member of
The Australian Institute of Geoscientists. Mr Shand has sufficient experience relevant to the style of mineralisation
and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person
as defined in the 2012 Edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources,
and Ore Reserves (JORC Code). Mr Shand consents to the disclosure of information in this report in the form and
context in which it appears.
COMPETENT PERSON’S STATEMENTS – ORE RESERVES
The information in this Release which relates to the 2020 Ore Reserves estimate accurately reflect information
prepared by Competent Persons (as defined by the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves). The information in this public statement that relates to the Mt Weld Rare Earths
Project is based on information resulting from Feasibility works carried out by Auralia Mining Consulting Pty
Ltd. Mr Steve Lampron completed the Ore Reserve estimate. Mr Steve Lampron is a Member of the Australasian
Institute of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity that he is undertaking to qualify him as a Competent Person
as defined in accordance with the 2012 Edition of the Australasian Joint Ore Reserves Committee (JORC). Mr Steve
Lampron consents to the inclusion in the document of the information in the form and context in which it appears.
109
Lynas Rare Earths Limited | 2022 Annual Report Additional Information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report.
The information is current as at 1 September 2022.
(A) Distribution of Ordinary Shares
The number of shareholders by size of holding of ordinary shares is:
Holdings Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Totals
Holders
26,966
16,954
4,086
3,389
200
51,595
Number
of Shares
Percentage
of Shares
12,005,175
42,365,210
30,408,364
82,525,780
735,107,025
902,411,554
1.330
4.690
3.370
9.150
81.460
100.00
The number of shareholders holding less than
a marketable parcel of shares
1,308
36,671
0.004
(B) Distribution of Employee Options/Performance Rights
There are 3,730,557 unlisted employee options / performance rights. The number of beneficial holders, by size of
holding, of employee options / performance rights are:
Holders
0
0
0
20
10
30
Holdings Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
110
www.LynasRareEarths.com (C) Twenty Largest Shareholders
The names of the twenty largest registered holders of quoted shares are:
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3 CITICORP NOMINEES PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5 BNP PARIBAS NOMS PTY LTD
Continue reading text version or see original annual report in PDF format above