More annual reports from Lynas Rare Earths:
2023 Report2023
Annual Report
Contents
FY23 Key Figures and Highlights
Letter from the Chairman
CEO Review
Our Operations
Living our Values
Board of Directors
Senior Management Team
Directors’ Report
Environmental, Social and
Governance 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
Mineral Resources and Ore Reserves
Additional Information
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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.
FY23 Key Figures
and Highlights
$739.3m
Sales Revenue
$310.7m
Net Profit after Tax
1102
Employees
25%
Women
Employees
$1.01b
Cash and Short Term
Deposits
$595.5m
Property, Plant &
Equipment Capital Spend
16,780 tonnes
Total REO production
6,142 tonnes
Total NdPr production
External
accreditations
maintained
1
Lynas Rare Earths Limited | 2023 Annual Report
Letter from the Chairman
Dear Shareholder, I’m delighted to present
the Annual Report for the 2023 financial year.
This year Lynas has delivered excellent production outcomes, particularly
in the second half of the year. In addition, the Company has progressed key
growth projects which are designed to meet forecast accelerated demand
growth for rare earths and deliver long term shareholder value.
I am pleased to report that Lynas achieved sales revenue of $739.3 million
and Net Profit After Tax (NPAT) of $310.7 million. The company also recorded
a 4% increase in NdPr production year on year.
These strong financial results were achieved in a year that was marked by
external headwinds, including lower market pricing for rare earth products
and water supplier issues that limited first half production in Malaysia. This
was made possible by the team’s drive and ability to succeed in challenging
conditions.
The average China domestic price of NdPr (VAT excluded) decreased during
the year from the record prices achieved in FY22. Future market price
trends will continue to depend on end product demand and the further
development of the outside China rare earths market.
This was a significant year for the Lynas growth projects with construction
of the Kalgoorlie Rare Earths Processing Facility largely complete and
commissioning underway. In Malaysia, construction of Mixed Rare Earth
Carbonate (MREC) receiving facilities in Malaysia was well advanced.
In Western Australia, a new growth project, the Mt Weld capacity expansion,
was announced in August 2022. The Mt Weld project will deliver capacity to
produce sufficient concentrate feedstock for production of 12,000 tonnes
per annum of finished NdPr product. The project includes scale and
efficiency improvements and sustainability and circular economy initiatives,
including improved water recycling and a new renewable power initiative.
Design and long lead procurement activities for the Mt Weld project were
undertaken in FY23 and early works progressed following formal approval
of Minor and Preliminary Works from the WA Environmental Protection
Authority (EPA) in March 2023. A $20 million grant from the Australian
Government’s Modern Manufacturing Initiative Manufacturing Integration
Stream will contribute to the new Apatite Leach Circuit project which is part
of the Mt Weld expansion project.
In line with our commitment to reducing Greenhouse Gas (GHG)
emissions and transitioning to cleaner energy sources, we released a
tender for a gas-renewable hybrid power station at Mt Weld during the
year. The gas-renewable solution will replace the current diesel power
station at Mt Weld and provide benefits including lower GHG emissions
and reduced exposure to fuel markets. An early works contract has been
awarded and contract negotiations are expected to be concluded over the
coming months.
“ Our company
is committed
to meeting
customer,
community and
investor needs
for ethically
and responsibly
produced rare
earths.”
22
www.LynasRareEarths.com During the year a greenfield site in an existing industrial zone in Seadrift,
Texas, was secured for our new United States (U.S.) Processing Facility. This
large site will allow for co-location of the Heavy Rare Earth and Light Rare
Earth separation plants as well as potential future growth opportunities
such as downstream processing and recycling to create a circular mine to
magnet supply chain.
Subsequent to year end, on 1 August 2023 we were delighted to announce an
approximately US$258 million follow on contract with the U.S. Department
of Defense (DoD) for the construction of the Heavy Rare Earths component
of the Lynas U.S. Rare Earths Processing Facility. The updated contract is
an expenditure-based contract under which all of Lynas’ properly allocable
construction costs will be reimbursed. This contract is in addition to the
Light Rare Earths contract with the Department of Defense announced
in January 2021.
Lynas’ U.S. Rare Earths Processing Facility in Texas will be a commercial
facility serving both DoD and commercial customers and is targeted to
be operational in FY2026.
These are exciting projects and, together with our exploration programme
at Mt Weld, seek to ensure Lynas is well positioned to grow with the market
as demand for rare earths accelerates.
From a capital management perspective, Lynas is well positioned with
a closing cash balance of $1.1 billion to support our growth projects.
As we grow, we seek to increase efficiencies and share learnings
between and throughout our operations. One of the ways we can do this
is through workforce mobility and it is very pleasing that we have been
able to bring some of our talented Malaysian team to Kalgoorlie to support
the commissioning and operation of our new Facility. We recognise that
we operate in a competitive market and providing career development
opportunities is one of the ways we support our people and build the next
generation of leaders.
Our company is committed to meeting customer, community and investor
needs for ethically and responsibly produced rare earths. We work closely
with our people and our local communities to provide opportunities and
build shared value. From an environmental, social and governance (ESG)
perspective, we are focused on transparency and continuous improvement
and are delighted to share our latest updates with you in the Lynas 2023
ESG Report which is available at LynasRareEarths.com.
On behalf of my colleages on the Board, I would like to thank Amanda
Lacaze, her executive team, and all Lynas employees for leading the
company through another excellent year.
The Board would also like to thank each of our shareholders for your
continued support. We look forward to continuing to build shareholder
value and share our progress in the year ahead.
Kathleen Conlon
Chairman
33
Lynas Rare Earths Limited | 2023 Annual Report CEO Review
Lynas Rare Earths delivered strong results for
the 2023 financial year. This included record
annual concentrate production and record NdPr
production in two consecutive quarters in the
second half of the year. Financial performance
remained strong despite some difficult external
factors and softer rare earths prices.
Mt Weld delivered record concentrate production in FY23. This reflected a
strong culture of continuous improvement, including excellent metallurgical
work on improving process efficiency. The record concentrate production
during the year was sufficient to feed the Lynas Malaysia plant and build
inventory for our new Kalgoorlie Rare Earths Processing Facility.
In Malaysia, record production of NdPr was achieved in the 2nd half of the
year. This followed a difficult first half of year, when we suffered from water
supply disruptions as a consequence of equipment failures experienced by
our local water supplier.
The team continued to focus on cost control and efficiency improvements.
This focus has ensured that Lynas remained well positioned to supply our
strategic customers whilst mitigating the effects of the continuing high-cost
environment throughout the financial year.
We continued to make excellent progress on our ambitious expansion
programme, including the Mt Weld exploration and capacity expansion
projects and the construction and progressive commissioning of the
Kalgoorlie Rare Earths Processing Facility.
Despite the less favourable market dynamics, the strong business
performance during FY23 enabled us to close the year with a cash balance
of $1 billion, providing funding certainty for our key growth projects.
Safety in focus across all sites
Ensuring the health and safety of our people, our communities and
our environment is always our number one priority. In FY23, it was
disappointing to see the 12-month rolling lost time injury frequency rate
increase to 1.2 per million hours worked at 30 June 2023 (June 2022: 0.8 per
million hours worked). In addition, the 12-month total recordable injury
frequency rate at 30 June 2023 was 3.2 per million hours worked (June
2022: 2.4 per million hours worked).
Zero Harm remains our shared goal. Additional sites and increased
construction activity have introduced new risks. In response we have
increased our investment in safety, including enhancing our team
structure, investing further in process safety initiatives, implementing
additional training and introducing new management processes to ensure
we learn from issues on each site and share improvements at all sites.
“We are the
preferred supplier
of the NdPr suite
of products to the
Japanese market
reflecting our
excellent product
and service quality”
4
www.LynasRareEarths.com Supplying rare earths for the products we use everyday
In FY23, NdPr production increased to 6,142 tonnes (from 5,880 tonnes in FY22) and total REO production increased
to 16,780 tonnes (from 15,970 tonnes in FY22).
Lynas has developed strong relationships with strategic customers. We are the preferred supplier of the NdPr suite
of products to the Japanese market reflecting our excellent product and service quality. All our people understand
that customers are the lifeblood of our company and are focused on ensuring we deliver excellent customer service.
Outlook
Lynas remains confident that the rare earths market will continue to grow in both value and demand. We are
focused on growing profitably as the market grows.
In FY24, we will continue to optimise our operations to provide a strong foundation for continuing growth with
existing and new customers.
The teams in Australia and Malaysia continue to put in enormous efforts to execute Lynas’ ambitious growth plans.
I would like to thank all members of our team for their hard work throughout the year.
To our shareholders, thank you for your ongoing support of the business. We are fortunate to operate in an exciting
and growing market and I look forward to updating you on our achievements in the next financial year.
Amanda Lacaze
Managing Director and Chief Executive Officer
5
Lynas Rare Earths Limited | 2023 Annual Report 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 | 2023 Annual Report
7
Lynas Malaysia: Integrated Rare Earths refinery in Gebeng, Malaysia.MALAYSIAMt Weld, WA: Tier 1 Rare Earths deposit, Concentration Plant, Capacity expansion ProjectAUSTRALIAUNITED STATESU.S. Rare Earths Processing Facility Project (Heavy and Light Rare Earths)Kalgoorlie, WA: New Rare Earths Processing Facility BOARD OF DIRECTORS
Kathleen Conlon
Chairman
Amanda Lacaze
Managing Director & CEO
John Beevers
Non-Executive Director
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
VP Major Projects
Sarah Leonard
General Counsel &
Company Secretary
Pol Le Roux
Chief Operating
Officer
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 2023. 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%
Mt Weld Mining
Pty Ltd
ABN 96 053 160 400
Date of Incorporation
29/7/1991
Registered in
NSW
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
99.99%
100%
Lynas Africa
Limited
Malawi Company No
8409
Date of Incorporation
12/7/2007
Registered in
Malawi
9
Lynas Rare Earths Limited | 2023 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, a fellow of the Australian Institute of Company Directors (AICD) and Chairman of the AICD Corporate
Governance Committee, former President of the NSW division of the AICD and a former member of the National
Board of the AICD. 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 and
Deputy Chair 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 member and 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, Orica Limited, Cricket
Australia, Infrastructure Australia and Pro-Chancellor of Curtin University. Dr Guthrie was formerly the Lead
Independent Director and Deputy Chair of Adbri Limited and a non-Executive Director of the Australian
Broadcasting Corporation. She is a Fellow of the Australian Institute of Company Directors and the Academy of
Technological Sciences and Engineering and the Australasian Institute of Mining and Metallurgy and holds an
Honorary Doctor of Science from Curtin University. Dr Guthrie was appointed an Officer of the Order of Australia
in 2021 in recognition of her contribution to the minerals and resources sector.
Dr Guthrie is a member of the Audit, Risk and ESG 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. He is a member of the Australian Institute of Company
Directors.
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. 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) and an adjunct professor at the University of Queensland Business School. 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 | 2023 Annual Report John Beevers, Bachelor of Engineering, Master of Business (Appointed 1 May 2023)
Non-Executive Director
Mr Beevers joined the Company as a Non-Executive Director on 1 May 2023. Mr Beevers is an experienced Board
director with over 30 years’ experience in the resources, mining services and chemical industries. He has broad
international experience in operations and leadership, including as CEO of Orica Mining Services and Managing
Director for and CEO for Groundprobe (a member of the Orica Group).
Mr Beevers is currently a Non-Executive Director of Orica Limited and Syrah Resources Limited. He is also a grad-
uate of the Australian Institute of Company Directors.
Mr Beevers is a member of the Nomination, Remuneration and Community Committee and a member of the
Health, Safety and Environment Committee.
RESIGNATIONS
There have been no resignations from the Board during the period.
COMPANY SECRETARY
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 mining of Rare Earth minerals in Australia and minerals processing 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.
12
www.LynasRareEarths.comDirectors’ Report 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 2023 financial year was another productive year for Lynas and the company delivered a strong profit result
whilst investing in plant and equipment for future growth.
Net Sales Revenue
Cost of Sales
Gross Profit
Net Profit Before Tax
Net Profit After Tax
FY23
$m
739.3
(399.9)
339.4
347.8
310.7
FY22
$m
920.0
(348.4)
571.6
535.8
540.8
30 June 23
$m
30 June 22
$m
Cash and Short-term Deposits
1,011.2
965.6
Net Assets
2,163.4
1,645.6
Movement
%
(19.6%)
14.8%
(40.6%)
(35.1%)
$m
(180.7)
(51.5)
(232.2)
(188.0)
(230.1)
(42.5%)
Movement
%
4.7%
31.5%
$m
45.6
517.8
Market Capitalisation
6,396.6
7,878.0
(1,481.4)
(18.8%)
Mt Weld
Lynas Rare Earths continues to develop the Mt Weld resource to meet forecast demand growth.
Mt Weld delivered record concentrate production during the year. Mt Weld produced sufficient concentrate to feed
the Lynas Malaysia plant and build inventory for the new Kalgoorlie Rare Earths Processing Facility.
Mining Campaign 4-1
Mining Campaign 4-1 was completed at Mt Weld during the year. Ore mined in this campaign is being transported
to the run of mine stockpile for future blending.
Exploration
The Mt Weld exploration program on the exploration target in the fresh carbonatite below the current Mt Weld life
of mine design and ore reserve was progressed through the year. Reverse circulation drilling has commenced with
97 holes (17,432m) completed to date.
13
Lynas Rare Earths Limited | 2023 Annual Report Mt Weld Expansion
On 3 August 2022, Lynas announced an approximately $500m project to expand capacity at the Mt Weld mine and
concentration plant. The expansion will enable capacity to produce sufficient concentrate feedstock for production
of 12,000 tonnes per annum of finished NdPr product. The 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, further sustainability and circular economy activities are planned for
the Mt Weld site, including:
• A staged transition from diesel fuelled power generation to gas/renewable power generation
• 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.
The project schedule remains on track at 30 June 2023 with earthworks nearing completion and concrete works
well progressed. Fabricated steel modules are being delivered to site in preparation for structural, mechanical and
piping (SMP) contractor mobilisation in the September 2023 quarter.
Formal approval of the Minor and Preliminary Works application was received from the WA Environmental
Protection Authority (EPA) in March 2023. This provided the approvals needed to progress early works. The Mt Weld
Life of Mine Proposal (EPA Assessment) four-week public review period closed in June 2023. The next step for the
Life of Mine assessment is for the EPA to complete its assessment report.
Proposals for a gas renewable hybrid power station under a Power Purchasing Agreement commercial model
have been evaluated and an early works contract has been awarded. Contract negotiations will be concluded
over the coming months. As announced on 21 June 2023, Lynas has been awarded a $20 million grant as part of
the Australian Government’s Modern Manufacturing Initiative Manufacturing Integration Stream. The grant will
contribute to the development of a new capability to process apatite-rich ores from the Mt Weld ore body through
a newly-developed process containing two circuits for the removal of apatite. The Apatite Leach Circuit project will
be undertaken as part of the Mt Weld expansion project.
Lynas Malaysia
During the early part of FY23, production was limited by significant water supply disruptions at the Lynas Malaysia
plant. During July and August 2022, water supply from the local water utility, PAIP, remained unpredictable and on
most days was below the level required to run all 4 kilns. In early September 2022, PAIP experienced a catastrophic
equipment failure in its water supply infrastructure, following the rupture of a 1600mm diameter pipe 10 metres
underground. This led to a water supply outage affecting all users in the Kuantan area, including residential customers.
Lynas personnel were dispatched to help PAIP expedite repair works, including the construction of a 123 metre bypass.
The water supply issues were resolved in October 2022 allowing production ramp up through the second
half of FY23. During this period, consecutive quarters of record NdPr production were delivered. This excellent
performance is the result of effective operational equipment performance, continuous improvements managing
upstream and downstream dependencies between Mt Weld and the Lynas Malaysia plant, and no significant
downtime from external events.
14
www.LynasRareEarths.comDirectors’ Report Works to receive mixed rare earth carbonate (MREC) feedstock from the Kalgoorlie Facility are nearing completion and
a program of plant improvements to increase efficiency is underway. Construction of the Permanent Disposal Facility
(PDF) for WLP residue is ongoing. Construction of initial cells is complete and the first material has been emplaced.
As announced on 14 February 2023 and 8 May 2023, the Malaysian Atomic Energy Licensing Board (AELB) has
renewed the current operating licence for the Lynas Malaysia plant for three years expiring March 2026, subject to
conditions that prohibit the import and processing of Mt Weld lanthanide concentrate from 1 January 2024.
Kalgoorlie
The new Rare Earths Processing Facility in Kalgoorlie is a foundation project of the Lynas growth plan.
Final major construction activities for the Kalgoorlie Rare Earths Processing Facility continued during the year and
plant commissioning commenced in late FY23.
The only major area required for first production which remains under final construction in Q1 FY24 is the waste
gas treatment plant. Additional resources have been mobilised to assist in the completion of this item however
productivity improvements are limited by workfront availability.
Commissioning of the plant has been undertaken in 4 phases and the final stage 4 commissioning commenced in
June 2023. Members of our Lynas Malaysia team have been mobilised to assist with the final stages of commissioning
and the initial stages of production. Construction verification, energisation and function testing was completed for
the majority of process areas with significant progress achieved on the wet and fluid commissioning and process
commissioning in Q4 FY23. This included Stage 4 commissioning of the chemical and wet circuits using Rare Earth
carbonate from Lynas Malaysia, including neutralisation, filtration and carbonation circuits. Chemicals required for
production have been received to on-site storage facilities and first delivery of concentrate from Mt Weld to support
feed-on has occurred.
Major earthworks including ponds required for initial production and on-site services including power, water and
laboratory facilities are complete, including the on-site gas supply. First production of MREC (Mixed Rare Earth
Carbonate) is currently targeted for September 2023. This remains within the range of ramp up scenarios that
has been considered for Kalgoorlie. The excellent NdPr production performance during the March and June 2023
quarters has enabled Lynas to build finished goods inventory to assist in meeting key customers’ requirements
during any transition period.
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 progressing plans for the U.S. Rare Earths Separation Facility.
As announced on 1 August 2023, Lynas has signed a follow on contract with the United States (U.S.) Department of
Defense (DoD) for the construction of the Heavy Rare Earths component of the Lynas U.S. Rare Earths Processing
Facility in Texas.
The updated contract is an expenditure-based contract under which all of Lynas’ properly allocable construction costs
will be reimbursed. A contribution by the U.S. Government of approximately US$258 million is currently allocated to
the Project. This is an increase from the approximately US$120 million announced in June 2022. The updated contract
follows detailed design work and cost updates since the original design was completed.
The project, conceived and jointly supported by Lynas and the DoD, will strengthen supply chain resilience for
responsibly produced rare earths as inputs to the United States’ burgeoning high-tech industry as well as U.S. and
allied nation national security needs. On completion, this project will be the only scale producer of separated Heavy
Rare Earths outside of China.
The contract is sponsored by the U.S. Government’s Industrial Base Analysis and Sustainment (IBAS) Program to
support the development of a U.S. rare earth supply chain.
Lynas has completed the purchase of a 149-acre greenfield site in Seadrift, Texas. The site was purchased from Union
Carbide Corporation, a wholly owned subsidiary of The Dow Chemical Company, and is located in an existing industrial
zone. The site was selected for its proximity to a skilled workforce, potential customers, infrastructure and logistics.
This large site will allow for co-location of the integrated Heavy Rare Earths and Light Rare Earth separation plants
as well as potential future growth opportunities such as downstream processing and recycling to create a circular
mine to magnet supply chain.
15
Lynas Rare Earths Limited | 2023 Annual Report Lynas’ U.S. Rare Earths Processing Facility in Texas will be a commercial facility serving both DoD and commercial
customers and is targeted to be operational in FY2026 (1 July 2025 – 30 June 2026).
Once operational, feedstock for the Facility will be sourced from the Lynas Mt Weld rare earths deposit and
Kalgoorlie Rare Earths Processing Facility in Western Australia. Mt Weld is recognised as a world-class source of
Light and Heavy Rare Earth minerals. The U.S. Facility will be able to process feedstock from other sources if/when
they become available and are qualified to meet processing requirements.
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 2023 was 1.2 per million hours worked (June 2022:
0.8 per million hours worked). In addition, the 12-month total recordable injury frequency rate at 30 June 2023
was 3.2 per million hours worked1 (June 2022: 2.4 per million hours worked). It is disappointing that lost time and
restricted work injuries have risen over the period. This will be a focus of our health and safety programs in FY24.
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 October
2022, the DAE (Department of Atomic Energy) completed its latest licence renewal audit of the Lynas Malaysia
plant, which achieved a rating of “Very Satisfactory”, which is the highest performance rating.
Lynas supports the objectives of the Paris Agreement in respect of Greenhouse Gas (GHG) emissions and in
September 2021 introduced the Lynas Greenhouse Gas (GHG) Policy. As advised in January 2023, Lynas withdrew
from the Science Based Targets initiative (SBTi) as publication of guidance and integration of the Chemical industry
pathway into the SBTi is now expected for January 2024, beyond the timeframe for verification of targets within two
years of Lynas’ commitment. Lynas will focus on setting targets and taking action to reduce the emissions intensity
of production as we work towards meeting the objectives of the Paris Agreement.
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.
1 Subsequent to the release of the Quarterly Report for the period ended 30 June 2023 on 31 July 2023, which stated that Lynas’ TRIF rate
to 30 June 2023 was 3.4 per million hours worked, reclassification of an injury has resulted in a change to the 3.2 per million hours worked.
16
www.LynasRareEarths.comDirectors’ Report FY23
% change
5%
(4%)
(20%)
(23%)
FINANCIAL AND OPERATIONAL PERFORMANCE
Sales volume, revenue and costs
Sales by tonnage and value
FY23
FY22
FY21
FY20
Sales volume
Cash receipts from customers
Sales revenue
Average selling price
Cost of sales
(REOt)
(A$m)
(A$m)
(A$/kg)
(A$m)
16,014
820.8
739.3
46.2
15,263
855.0
920.0
60.3
16,405
465.4
489.0
29.8
14,172
321.8
305.1
21.5
(399.9)
(348.4)
(302.2)
(257.3)
15%
During the year, price and demand for rare earth products reduced from the very high levels experienced in FY22.
Prices stabilised late in the year. Future pricing trends will depend on the economic recovery in China and the
Chinese production quota for the second half of 2023.
Market prices
The average China domestic price of NdPr (VAT excluded) decreased from US$124.0/kg in June 2022 to US$60.4/kg
in June 2023. Future market price trends continue to depend on end product demand (in particular in the automo-
tive industry).
Lynas has focused on developing strong customer relationships with strategic customers, primarily outside China.
Lynas is the leading supplier of the NdPr family of products to the Japanese market.
Production volumes
Production volumes
FY23
FY22
FY21
FY20
FY23
% change
Ready for sale production volume total
(REOt)
Ready for sale production volume NdPr
(REOt)
16,780
6,142
15,970
5,880
15,761
5,461
14,562
4,656
5%
4%
Ready for sale production of NdPr increased by 4% in FY23 vs FY22, including record production volumes in the
March 2023 and June 2023 quarters.
This result was achieved notwithstanding the challenges which were faced during the early part of the year, in particular:
• Water shortages due to supplier issues limited production in the first half of FY23 as mentioned in the
operational summary above. These water supply issues were largely resolved in October 2022.
17
Lynas Rare Earths Limited | 2023 Annual Report Cash and cash flows
Net operating cash inflows
Net investing cash outflows
Net financing cash inflows / (outflows)
Net cash flows
Impact of foreign exchange
Cash and cash equivalents
FY23
A$m
386.8
(554.5)
199.0
31.3
14.4
1,011.2
FY22
A$m
460.1
(83.6)
(13.8)
362.7
22.1
965.6
Operating cash flows remained strong as a result of strong cash flows from sales during the first half of FY23. These
operating cash flows include the payment of $6.2m 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 and Mt Weld Expansion projects. Finance cash inflows includes $214.4m
received through share issues to JARE during the period, offset slightly by US$4.0m (A$5.9m) of principal repayments
made on the JARE loan facility in line with the loan agreement.
Capital Expenditure
Capital expenditure is expected to be approximately $600 million in FY24 for sustaining capital and major growth
projects.
This includes expenditure in respect of:
the construction of the offsite PDF in Malaysia;
the completion of the Kalgoorlie Rare Earths Processing Facility;
the Mt Weld expansion project to increase concentrate feedstock;
the Lynas portion in addition to USG funding for the US Light Rare Earth plant;
•
•
•
•
• mining development works at Mt Weld;
• sustaining capital increases due to increased plant size and preventative maintenance;
• other ongoing operational capital expenditure across all Lynas sites; and
• operating costs that are capitalised in accordance with normal accounting principles.
As at 30 June 2023, the capital commitments were $240 million primarily related to the Kalgoorlie Rare Earths
Processing Facility and the Mt Weld Expansion Project.
Debt and Capital
JARE loan
Total borrowings
Financial income
Financial expenses
18
FY23
A$m
177.4
177.4
36.4
(4.0)
FY22
A$m
186.8
186.8
4.6
(9.5)
www.LynasRareEarths.comDirectors’ Report US$4.0m (A$5.9m) of principal repayments were made on the JARE facility, as well as the settlement of US$11.5m
(A$17.1m) of deferred interest through a share issue. This was offset by the weakening of the Australian dollar against
the US dollar through the period. The financial income increased significantly as a result of improved interest rates
and a steady cash balance. Financial expenses have decreased as $12.7m (FY22: $5.8m) 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.
During the year ended 30 June 2023, the Company issued shares as shown below:
Shares on issue 30 June 2022
Issue of shares pursuant to exercised performance rights
Issue of shares
Shares on issue 30 June 2023
Performance rights
At 30 June 2023, the Company had the following options and performance rights on issue:
Number
‘000
902,412
1,268
30,135
933,815
Number
‘000
3,503
FY23
Cents
per share
34.05
33.92
FY22
Cents
per share
59.95
59.70
Performance rights
Earnings per share
For the year ended 30 June
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Dividends
There were no dividends declared or paid during the year ended 30 June 2023 (2022: nil) and no dividends have
been declared or paid since 30 June 2023.
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 | 2023 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.
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 FY23, Lynas continued to enhance risk management systems and processes, including by engaging external
subject matter experts.
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.
1.1
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
Earth 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 FY23:
September 2022
Quarter
December 2022
Quarter
March 2023
Quarter
June 2023
Quarter
US$/kg
94
83
87
60
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.
20
www.LynasRareEarths.comDirectors’ Report 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.
1.2
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.
1.3
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, Lynas holds significant non-current assets in 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 2023
$
30 June 2022
$
30 June 2021
$
30 June 2020
$
30 June 2019
$
USD/AUD
MYR/AUD
$0.6760
$3.0688
$0.7258
$3.0698
$0.7468
$3.0806
$0.6714
$2.8233
$0.7156
$2.9521
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.
1.4
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.
1.5
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.
21
Lynas Rare Earths Limited | 2023 Annual Report 1.6
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 of the profitability of any future operations. Investors should be cautioned not to place undue reliance
on any estimates made by Lynas. Lynas cannot be certain that its mineral resource and ore reserve estimates 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”).
1.7
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 environment,
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.
22
www.LynasRareEarths.comDirectors’ Report 1.8
Availability of key inputs, including water
The Mt Weld Concentration Plant, the Lynas Malaysia Plant and the Kalgoorlie Rare Earth Processing Facility 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, the water supply to the Lynas Malaysia plant is primarily sourced from the local Kuantan water supply
infrastructure, supplemented by recycling and the supply to the Kalgoorlie Rare Earth Processing Facility is
primarily sourced from under a water supply agreement for recycled water from the City of Kalgoorlie-Boulder.
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.
1.9
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.
1.10
Attraction and retention of skilled personnel
Attraction and retention of skilled personnel is important to Lynas’ operations and its further growth.
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.
1.11
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 technologies, 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.
1.12
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 Earths’ products. Any significant trends away from technologies
that utilise Lynas Rare Earths’ products could materially adversely affect the Lynas business.
1.13
Project development risks
Lynas is undertaking significant and complex construction projects, primarily related to the new Lynas Rare Earths
facility in Kalgoorlie and the planned Lynas U.S. Rare Earths Processing Facility in Texas. 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.
2.
2.1
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.
23
Lynas Rare Earths Limited | 2023 Annual Report 2.2
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.
2.3
Political risks and government actions
Lynas’ operations could be affected by government actions in Australia, Malaysia, USA 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.
2.4 Malaysian regulatory matters
Without limiting the generality of the risks specified above in this section, as announced on 14 February 2023 and
8 May 2023, the Malaysian Atomic Energy Licensing Board (AELB) has renewed the current operating licence for
the Lynas Malaysia plant for three years expiring March 2026, subject to conditions that prohibit the import and
processing of Mt Weld lanthanide concentrate from 1 January 2024.
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.
2.5
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.
24
www.LynasRareEarths.comDirectors’ Report Sanctions for non-compliance with these laws and regulations may include administrative, civil and criminal penalties,
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.
2.6
Climate change risks
Climate change and the rapidly evolving response to it may lead to a number of risks, including but not limited to
transition risk such as:
•
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. Further
information on climate related risks is outlined in TCFD report below.
2.7
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.
2.8
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.
2.9
Legal action
It is possible that, Lynas could be exposed to litigation or proceedings, either from shareholders, financiers, regula-
tors or members of the communities in which Lynas operates.
2.10 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.
2.11
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.
25
Lynas Rare Earths Limited | 2023 Annual Report 3.
3.1
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.
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$137m as at 30 June 2023. The principal
amount will be due for repayment in fixed loan repayments between 31 December 2023 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.
3.2
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.
4.
4.1
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.
4.2
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.
4.3
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.
4.4
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 geopo-
litical matters), social media disinformation campaigns, penetration of Lynas systems (including through attacks
on Lynas’ suppliers) and other similar matters. A cyber event may lead to adverse impacts on Lynas’ operations and
financial performance.
26
www.LynasRareEarths.comDirectors’ Report 5.
Task Force on Climate-related Financial Disclosures (TCFD)
Lynas is committed to the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD)
framework and has continued to enhance disclosures since first reporting against the TCFD in 2020.
5.1
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.
In FY23, key initiatives undertaken to enhance climate-related governance included:
• Life Cycle Assessments of Greenhouse Gas emissions integrated into new capital requests to ensure GHG
emissions are considered as part of the decision-making process.
• 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.
5.2
Climate Strategy
Climate-related risks are integrated into company risk management processes.
In FY23, Lynas developed new plans and implemented strategies to address material climate-related issues.
This included the following strategies and actions:
Action Areas
Operating site
Strategy
FY23 Progress
Reduce reliance
on fossil fuels
Malaysia
Implement on site renewable
generation within limits specified
by energy regulator
80% purchased electricity from
renewable sources in 2025
Contract signed for 1MW on site solar
installation
Renewable Energy Certificates secured
for 80%+ purchased electricity in 2025
Mt Weld, WA
Complete scope of work and tender
for gas then hybrid renewable power
station
Tender released, proposals evaluated
and early works contract awarded
Increase
production
capacity to meet
forecast demand
growth for rare
earths
Prepare for
potential extreme
weather events
Invest in water
recycling and
identification of
new water sources
Mt Weld, WA
Mt Weld exploration program and
capacity expansion to increase
concentrate feedstock production
Mt Weld, WA
Prepare for potential severe rain or
flooding event
Mt Weld, WA
Increase recycled water use and
identify additional water supply
Mt Weld exploration program
commenced and 97 reverse
circulation drilling holes (17,432m)
completed to date
Mt Weld capacity expansion project
announced August 2022; Minor
and Preliminary Works approval
received, earthworks and long-lead
procurement progressed
Construction of a flood protection
barrier in H2 FY23 to protect the site
from extreme rainfall events and
surface flooding should they occur
Detailed design and long-lead
procurement for state-of-the-art high
recovery water recycling circuit from
the tailings dam and an additional
bore water desalination plant as part
of Mt Weld expansion project.
27
Lynas Rare Earths Limited | 2023 Annual Report 5.3
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.
Material climate-related risks and opportunities are outlined below:
Transition Risks
• Current reliance on fossil fuels and investment required to transition to cleaner
energy sources
• 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
Transition 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. Demand for rare earths is forecast
to grow and Lynas can leverage its competitive advantage to increase outside-
China supply of rare earths
Acute Physical risks
• More extreme weather events causing physical impacts on Lynas facilities and
Event-driven physical
risks including increased
severity of extreme
weather events
people including potential storms and bushfires
Chronic Physical risks
• Water scarcity requiring additional investment in water recycling and identifi-
cation of new water sources
Longer-term shifts in
climate patterns e.g.
higher temperatures,
changes in drought and
sea level rise
Ensuring clean and sufficient water is a global challenge and climate change is accelerating this. Lynas continues
to innovate to minimise water usage throughout our operations. At Mt Weld, this includes reducing the amount of
groundwater used per tonne of ore processed, and increasing the percentage of recycled water used in our operations.
From a water scarcity perspective, the sites where Lynas operates are assessed as:
Location
Climate
Annual Rainfall Average
Overall water risk rating2
Gebeng, Malaysia
Tropical / Monsoon
2,581 mm
Low-medium
Laverton, Western Australia
Semi-Arid
236 mm
High
Strategies to increase water resilience at Mt Weld are identified above.
2 https://www.wri.org/applications/aqueduct/water-risk-atlas
28
www.LynasRareEarths.comDirectors’ Report While still under construction and commissioning in FY23, the location of Lynas’ new Rare Earths Processing Facility
in Kalgoorlie, Western Australia, is also assessed as being in a high overall water risk rating location. Access to treated
grey water from the City of Kalgoorlie-Boulder was a key consideration in the site selection and the new Facility has
been designed to use treated grey water supplied by the City of Kalgoorlie-Boulder for processing. This water is a
by-product from the City’s wastewater treatment facility and will be used a further 6–7 times in processing.
Scenario Analysis
In FY23, scenario analysis was undertaken to identify and assess exposure to physical risks and opportunities to
increase resilience. The analysis was undertaken by FM Global and included both engineering data from site visits
as well as climate change insights and data.
Scenario analysis considered acute physical risks such as physical damage to assets (buildings, machinery, inventory)
and associated loss in profits caused by disruption to operations as a result of increased severity of extreme weather
events. It also considered chronic physical risks such as the impact of rising sea levels and global temperature
changes over time.
Short term (by 2030) and long term (by 2050) scenario analysis was conducted for both Lynas operating sites
(Mt Weld and Lynas Malaysia). Scenarios used for the analysis were the low, intermediate and high Representative
Concentration Pathways (RCPs) detailed by the Intergovernmental Panel on Climate Change (IPCC) (RCP 2.6, RCP
4.5 and RCP 8.5).
The projected changes in global mean surface temperature change (°C) between 2046–2065 for each of these
Pathways3 is: 0.4 to 1.6 (RCP 2.6); 0.9 to 2.0 (RCP 4.5); and 1.4 to 2.6 (RCP 8.5).
The scenario analysis indicated that Lynas was not exposed to material risks from exposure to acute and chronic
climate change risks such as extreme precipitation, wind, rising temperatures and sea level rise. Lynas was identi-
fied to have material exposure to one physical risk which is drought.
Opportunities to increase Lynas’ climate-related resilience have been identified and are being implemented.
This includes the state-of-the-art high recovery water recycling circuit from the tailings dam and an additional
bore water desalination plant being implemented as part of the Mt Weld expansion project.
5.4 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). In FY2023, Lynas continued to develop its reporting
on Scope 3 categories.
Company-wide total Scope 1 and 2 emissions for FY19-FY23 are as follows:
Reporting Year
Mt Weld
Kalgoorlie
Malaysia
Total
Scope 1
Scope 2
Scope 1
Scope 2
Scope 1
Scope 2
Scope 1
Scope 2
Scope 1+2
FY19
FY20
FY21
FY22
FY23
23,693
21,137
19,697
25,649
31,9624
–
–
–
34,071
49,544
60,245
49,544
110,179
–
–
–
32,634
43,387
53,771
43,387
97,159
–
–
–
39,951
43,917
59,648
43,917
–
–
9565
9,3875
–
–
40,807
42,831
67,412
42,831
42,952
43,568
84,301
43,568
103,565
110,243
127,869
Lynas supports the objectives of the Paris Agreement in respect of Greenhouse Gas (GHG) emissions. As advised in
3 https://ar5-syr.ipcc.ch/topic_futurechanges.php
4 Mt Weld expansion project commenced in FY23
5 Kalgoorlie facility under construction and not operational in FY22 or FY23
29
Lynas Rare Earths Limited | 2023 Annual Report January 2023, Lynas has withdrawn its prior commitment to the Science Based Targets initiative (SBTi) as targets
were required to be submitted for verification within two years of the commitment. As a growth business and
supplier of critical minerals required for the energy transition, including for electric vehicles and wind turbines,
Lynas was awaiting the development of the SBTi’s Chemical industry pathway. The publication of guidance docu-
ments and integration of the Chemical industry pathway into the SBTi is now expected for January 2024, beyond
the two year timeframe.
Lynas continues to focus on setting targets and taking action to reduce the emissions intensity of production as we
work towards meeting the objectives of the Paris Agreement.
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 2023.
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 1,268,124 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 2023:
For the period from 1 July 2022 to 30 May 2023:
Audit, Risk & ESG
G. Murdoch(c)
P. Etienne
J. Humphrey
Health, Safety
& Environment
P. Etienne(c)
K. Conlon
V. Guthrie
(c) Chair of Committee
For the period from 31 May 2023 to 30 June 2023:
Audit, Risk & ESG
G. Murdoch(c)
P. Etienne
J. Humphrey
V. Guthrie
(c) Chair of Committee
Health, Safety
& Environment
P. Etienne(c)
K. Conlon
V. Guthrie
J. Beevers
Nomination,
Remuneration & Community
J. Humphrey(c)
K. Conlon
G. Murdoch
V. Guthrie
Nomination,
Remuneration & Community
J. Humphrey(c)
K. Conlon
G. Murdoch
J. Beevers
31
Lynas Rare Earths Limited | 2023 Annual Report As summarised in the Corporate Governance Statement, the Audit, Risk & ESG Committee consists of independent
Directors.
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
J. Beevers(1)
Directors’
Meetings
Audit, Risk
& ESG
Health, Safety &
Environment
Nomination,
Remuneration &
Community
8
8
8
8
8
8
8
2
6
6
6
6
6
6
6
1
4
4
4
4
4
4
4
1
4
4
4
4
4
4
4
1
(1) J. Beevers was appointed on 1 May 2023 and has attended all meetings since appointed.
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 26 July 2023, Lynas announced that wholly owned subsidiary Lynas Malaysia had filed two judicial review
proceedings before the High Court of Malaya at Kuala Lumpur seeking judicial review of the Malaysian operating
licence conditions prohibiting the import and processing of lanthanide concentrate after 1 January 2024.
On 1 August 2023, Lynas announced that wholly owned subsidiary Lynas USA LLC had signed a follow-on contract
with the United States (U.S.) Department of Defence (DoD) for the construction of the Heavy Rare Earths compo-
nent of the Lynas U.S. Rare Earths Processing Facility in Texas. The updated contract is an expenditure-based
contract under which all of Lynas’ properly allocable construction costs will be reimbursed. A contribution by the
U.S. Government of approximately US$258 million is currently allocated to the Project. Lynas has completed the
purchase of a 149-acre greenfield site in Seadrift, Texas for the Project.
On 29 August 2023, Lynas updated the project budget forecast for the Kalgoorlie Rare Earths Processing Facility
to $730 million from the previously disclosed budget of $575 million. The updated project forecast was due to
construction cost increases, including in respect of SMPE (Structural, Mechanical, Piping and Electrical), concrete
and dam earthworks together with cost inflationary pressures experienced generally in the Western Australian
resources construction market. In addition, an estimated $50 million of pre commissioning and commissioning
costs will be capitalised.
With the exception of the above, there have been no other events subsequent to 30 June 2023 that would require
accrual or disclosure in this financial report.
32
www.LynasRareEarths.comDirectors’ Report Environmental, Social and
Governance Statement
Financial year ended 30 June 2023
The Lynas Environmental, Social and Governance Report (ESG Report) for FY2023 will be published on the
Group’s website, www.lynasrareearths.com, at the same time as the 2023 Annual Report is sent to shareholders.
Remuneration report – audited
Dear Shareholder,
On behalf of the Board, I am pleased to present our company’s Remuneration Report for the 2023 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 framework
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 FY2023, 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 Strategic Plan Progress; Safety; Greenhouse Gas Emission
Reduction Plans; Diversity; and Circular Economy Initiatives.
The Long Term Incentive (LTI) recognises that capital projects are a substantial growth driver for the company.
The LTI issued in FY2023 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 is related to strategic targets
aligned with Lynas’ strategic growth objectives.
Strong business performance
Lynas Rare Earths delivered strong operational performance during the 2023 financial year, with record production
achieved in the March and June quarters. Whilst external market forces resulted in lower market prices for rare earth
materials in FY23 compared to FY22, process improvements and the company’s continued focus on cost control
ensures that Lynas is well positioned to benefit from the forecast increase in demand for rare earths products.
Lynas continued to progress key growth projects during FY2023. Construction of the Kalgoorlie Rare Earths
Processing Facility is now approaching completion. Significant progress was made on the planned U.S. Rare Earth
Processing Facility in Texas, including site selection and progress on detailed design and long lead item procure-
ment. As noted, the LTI recognises that growth capital projects are a significant driver of value in this business.
In addition to competitive salaries and benefits, Lynas offers a company-wide employee bonus scheme (excluding those
eligible for STI/LTI) to provide all employees an opportunity to contribute to and benefit from the company’s success.
33
Lynas Rare Earths Limited | 2023 Annual Report Remuneration Report – Audited continued
FY23 updates
The Board continues to assess the external environment in line with our talent acquisition and retention strategies.
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. As the only established scale producer of separated rare earths outside
China, the experience of Lynas’ personnel is unique and retention is key to continued success of the business.
As set out in the 2022 Annual Report, a benchmarking review of the Lynas STI and LTI Plans was conducted in FY22
to ensure they remained comparable with peer group companies. The review showed that the Lynas remuneration
structure did not reflect the specialist nature or proven performance of Lynas personnel and that the ‘at risk’
components of remuneration was below that offered by other comparable companies. As a result of the review, the
Board updated the STI and LTI Plans in the 2023 financial year to increase the proportion of ‘at risk’ remuneration
and to ensure that Lynas’ remuneration remains competitive within the global rare earths industry so that experi-
enced personnel can be both attracted and retained. For the CEO, the STI target opportunity has been increased
to 100% of fixed remuneration (from 50% in FY22) and the LTI target opportunity has been increased to 150% of
fixed remuneration (from 75% in FY22). For executive KMP and Lynas Leadership Team members, the STI target
opportunity has been increased to 75% of fixed remuneration (from 50% in FY22) and the LTI Target opportunity has
been increased to 100% of fixed remuneration (from 37.5% in FY22). Actual remuneration outcomes for STI and LTI in
comparison to the opportunity are subject to satisfaction of the relevant performance conditions.
In addition to the changes to remuneration for KMP and Lynas Leadership Team members, the STI and LTI Plans
have been extended to include employees in roles that have considerable influence on outcomes associated with
capital management, operational leadership and major capacity growth projects or have specialist expertise in
strategic areas for Lynas.
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
34
www.LynasRareEarths.comDirectors’ Report This report sets out Lynas’ remuneration framework and outcomes for Key Management Personnel (KMP) for the
financial year ended 30 June 2023. 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 2023 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
J. Beevers
P. Etienne
V. Guthrie
J. Humphrey
G. Murdoch
Executives
Chairman, Non-Executive Director
Non-Executive Director
Non-Executive Director, Chair of the HSE
Committee
Non-Executive Director
Non-Executive Director, Chair of
the Nomination, Remuneration
& Community Committee
Australia
Australia
Australia
Australia
Australia
Full Financial Year
Commenced 1 May 2023
Full Financial Year
Full Financial Year
Full Financial Year
Non-Executive Director,
Chair of the Audit Risk & ESG Committee
Australia
Full Financial Year
G. Sturzenegger
Chief Financial Officer
S. Leonard
P. Le Roux
C. Jenney
General Counsel and Company Secretary
Chief Operating Officer
Vice President – Major Projects
Malaysia
Australia
Malaysia
Australia
Full Financial Year
Full Financial Year
Full Financial Year
Employed for Full Financial Year
but commenced role as KMP
from 3 October 2022
M. Ahmad
Vice President – Malaysia
Malaysia
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).
35
Lynas Rare Earths Limited | 2023 Annual Report Remuneration Report – Audited continued
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 FY23. 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
26.7 – 28.6%
33.3 – 36.3%
28.6 – 33.3%
27.2 – 33.3%
40.0 – 42.8%
33.3 – 36.3%
Fixed
STI
LTI
36
www.LynasRareEarths.comDirectors’ Report 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.
STI Opportunity
In addition to the Executive KMP, during FY23, three members of the Lynas Leadership Team
and twenty eight senior employees who are critical to the delivery of Lynas’ short-term opera-
tional and financial goals were invited to participate in the STI Plan.
Target Performance: In FY23, up to 100% of fixed remuneration for CEO. Up to 75% of fixed
remuneration for Executive KMP and Lynas Leadership Team. Up to 37.5% of fixed remuneration
for Senior Managers. Up to 10% of fixed remuneration for other employees eligible to participate
in the STI Plan.
Maximum Opportunity: In FY23, up to 125% of fixed remuneration for CEO. Up to 100% of fixed
remuneration for Executive KMP and Lynas Leadership Team. Up to 50% of fixed remuneration
for Senior Managers. Up to 11% of fixed remuneration for other employees eligible to participate
in the STI Plan.
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 FY23, three bands of performance were set for each performance condition:
• Threshold: 90% of target – 75% award for CEO, 66.6% award for executive KMP
• Target: 100% of budget – 100% award for CEO and KMP
• Maximum: 110% of budget – 125% award for CEO, 133.3% award for executive KMP
If performance falls between the Threshold and Maximum levels then awards are pro-rated.
No STI Plan awards will be made if there is an ‘at fault’ 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 FY23 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 FY23 STI Plan the areas selected for assessment were: (1) Progress on Strategic Plan/
Business Plan; (2) Safety; (3) Greenhouse Gas Emission Reduction Plans; (4) Diversity; and (5)
Circular Economy Initiatives.
Financial
Performance
Conditions
(60% weighting)
Non-financial
Performance
Conditions
(40% weighting)
37
Lynas Rare Earths Limited | 2023 Annual Report Remuneration Report – Audited continued
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 FY23 are measures which directly affect Lynas’
profitability and financial performance. Due to the anticipated increases in capital expenditure
for strategic 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 FY23 were selected by the Board for
the following reasons:
• Strategic Initiatives: Initiatives planned to deliver value for shareholders.
• Safety: Critical to the continued safe operation of the Mt Weld and Lynas Malaysia
operations.
• Greenhouse Gas Emission Reduction Initiatives: Important to Lynas’ stakeholders
and the future sustainable growth of the business.
• Diversity: Important to Lynas’ stakeholders and employee attraction and retention.
• Circular Economy: Aligns with Lynas’ ESG goals.
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
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 STI Plan are not transferable.
38
www.LynasRareEarths.comDirectors’ Report Long term incentive structure
This section summarises the LTI grants made in FY23.
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.
In addition to the Executive KMP, during FY23, three members of the Lynas Leadership Team
and twenty eight senior employees who are critical to the delivery of Lynas’ short-term opera-
tional and financial goals were invited to participate in the STI Plan.
LTI Opportunity
CEO – Up to 150% of fixed remuneration
Other KMP and Lynas Leadership Team – Up to 100% of fixed remuneration
Other invited employees – Up 25 to 50% of fixed remuneration depending on employee level
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
September 2025
Performance
Conditions
Relative TSR –
50% weighting
Two vesting conditions apply to the LTI grants made during FY23:
• Relative Total Shareholder Return (TSR)
• Strategic Target
Relative TSR is assessed over a three year period from 1 July 2022 to 30 June 2025, relative to
other companies in the ASX50 – 150 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%
Strategic Targets
– 50% weighting
The Strategic Target vesting condition is that by 30 June 2025:
• achieving production capacity uplift to the level required by Lynas’ strategic growth
plan is achieved;
•
the following Project milestones are successfully achieved;
• by the end of CY2024, the Kalgoorlie plant is ramped up and with capacity
to produce consistently at nameplate capacity;
• completion of the Mt Weld expansion capacity uplift to 12ktpa NdPr equivalent
by the end of CY2024; and
• US HRE and LRE plant constructed and operational by end of CY2025 subject to
finalisation of U.S. Government funding. In the event of delay to the U.S. Government
funding, processing of HRE in another location will satisfy this objective.
39
Lynas Rare Earths Limited | 2023 Annual Report Remuneration Report – Audited continued
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 Strategic Targets were selected due to their importance to Lynas’ long term strategic goals.
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 Strategic Targets will be assessed by the Board after 30 June 2025.
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.
40
www.LynasRareEarths.comDirectors’ Report D. REMUNERATION OUTCOMES IN FY23
FY23 STI grant performance outcomes
An award at 77.7% of fixed remuneration for CEO and 59.0% of fixed remuneration for executive KMP will be made
under the FY23 STI Plan. The table below sets out the outcomes of the FY23 STI Plan.
Performance Outcome – Financial Performance Conditions
Performance
condition
Lynas has recorded performance on EBITDA and NdPr Production that were at or above budget
in FY23.
Outcome –
target achieved
Outcome
Target
Actual
Weighting
Threshold
90%
Target
100%
Maximum
110%
Performance
Condition
EBITDA
NdPr
Production
Targets
Forecast
target(1)
106% of
Target
Forecast
Target(1)
99% of
Target
NdPr
Operating
Costs
Forecast
Target(1)
Target
Not
Achieved
20%
20%
20%
CEO
Outcome
(% of Fixed
Rem)
Executive
KMP
Outcome
(% of Fixed
Rem)
23.0%
18.0%
19.7%
14.7%
0%
0%
(1) 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 the following areas: (1) Progress on
Strategic Plan/Business Plan; (2) Safety; (3) Greenhouse Gas Emission Reduction Plans; (4)
Diversity; and (5) Circular Economy Initiatives.
Outcome –
target achieved
The Board has assessed an award at 87.5% (weighted outcome of 35%) against the non-financial
performance conditions.
Performance
Condition
Target
Outcome
Progress on
Strategic Plan/
Business Plan
Significant progress occurred on a number of key strategic
initiatives. This progress included:
Maximum
Achieved
• Securing a variation to Lynas Malaysia’s operating
licence allowing the continued operation of cracking
and leaching through to January 2024;
• Progress on the U.S. Separation Facility, including
the negotiations with the U.S Government;
• Completion of two equity subscriptions from
JARE, resulting in a contribution by JARE of
AUD$213.8 million; and
• Progress on the Mt Weld Expansion Project.
Safety
Safety performance, including TRIFR improvement and
implementation of strategic safety initiatives was assessed.
TRIFR and LTI rates increased in FY23 in comparison to FY22
and no STI award was made in respect of this category.
Not achieved
– no award in
this category
41
Lynas Rare Earths Limited | 2023 Annual Report Remuneration Report – Audited continued
Outcome –
target achieved
continued
Performance
Condition
Target
Outcome
Greenhouse
Gas Emission
Reduction
Plans
Progress in implementing strategic objectives to transition to
power supply from lower emissions sources was assessed.
Target
achieved
During FY23 a tender for the project of transitioning Mt Weld
from diesel power generation to hybrid gas then renewable
power generation were issued and evaluated as planned. An
early works agreement was awarded and progress occurred
on the negotiation of the power purchase agreement and
major works contract.
Contracts for the PV array in Kuantan were awarded during
FY23 for initial installation of 1.0 MW solar power.
Target
achieved
Diversity
Progress on diversity initiatives during FY23 was assessed.
Several initiatives, including a focus on diversity in recruit-
ment, were implemented in FY23. In particular, there has
been a focus on recruiting and developing female graduates
to understudy supervisory and panelman roles in operations.
In addition, there was recruitment of a diverse workforce in
Kalgoorlie including diversity of gender, age and ethnicity
and progress on our indigenous employment programme.
A target of 25% women employees by 30 June 2023 was
selected as the guidance for achievement on this perfor-
mance condition. This target was achieved.
Circular
Economy
Circular economy initiatives in respect of the NUF were
selected as one of the focus areas for the FY23 STI Plan.
Maximum
achieved
Four re-use applications for the NUF were identified and
progressed through feasibility assessments.
42
www.LynasRareEarths.comDirectors’ Report 2020 LTI grant performance outcomes
The LTI performance rights issued in September 2020 to executive KMP and LLT members were granted subject to
the following vesting conditions:
• Relative TSR – 50% weighting
• Lynas 2025 Project Targets – 50% weighting
The table below sets the performance outcomes.
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 1 July 2020
to 30 June 2023.
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
0%
50%
Between the 51st percentile
and the 76th percentile
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 –
Achieved at
Target
Lynas’ TSR was at the 97th percentile of ASX200 companies. The Relative TSR performance
condition has been achieved at Target. 100% of the Relative TSR Performance Rights will vest.
Performance outcome – Lynas 2025 Project Targets
Vesting Condition
The Lynas 2025 Project Target performance conditions is that the Lynas Kalgoorlie Rare Earths
Processing Facility is commissioned and operational by July 2023.
Outcome –
Not achieved
Despite significant progress against an accelerated timetable this performance condition was
not achieved.
Final major construction activities for the Kalgoorlie Rare Earths Processing Facility are nearing
completion and the only major area required for first production which remains under final
construction is the waste gas treatment plant. Commissioning has commenced with first
production of MREC (Mixed Rare Earth Carbonate) targeted for September 2023.
43
Lynas Rare Earths Limited | 2023 Annual Report Remuneration Report – Audited continued
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)
Total REO production (tonnes per annum)
Sales volume (REO tonnes per annum)
Average selling price (per REO tonne)
Profit / (loss) before tax ($‘000)
Profit / (loss) after tax ($‘000)
Earnings before interest and tax (EBIT)
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
2019
30 June
2020
30 June
2021
30 June
2022
30 June
2023
363,541
19,737
19,154
18.97
83,274
83,079
56,437
305,111
14,562
14,172
21.53
(19,156)
(19,395)
(6,245)
489,024
920,014
739,279
15,761
16,405
29.81
157,487
157,083
169,500
15,970
15,263
60.27
535,756
540,824
540,641
16,780
16,014
46.16
347,835
310,666
315,504
1,398,264
1,424,847
1,859,598
1,859,598
2,091,089
$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
$8.00
$6.85
34.05
33.92
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.
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
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.
Treatment of
incentives on
termination:
44
www.LynasRareEarths.comDirectors’ Report 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 committees).
The Chairman of the Board does not receive committee fees.
The current aggregate fee pool for the Non-Executive Directors of $2.2 million was approved at the AGM held on
29 November 2022.
The Non-Executive Director fees payable for the period from 1 July 2022 to 30 June 2023 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)
$375,292
$165,750
$49,725
$38,675
$24,862
$19,337
Board and committee fees were last reviewed effective from 1 July 2022.
The remuneration for each of the Non-Executive Directors for the financial years ended 30 June 2023 and 30 June
2022 is set out in Section H below.
45
Lynas Rare Earths Limited | 2023 Annual 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 FY2023 or FY2022. 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.
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benefits
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payments
)
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
FY23
Executive Director
A. Lacaze
1,488,308
378,860
Non-Executive Directors
K. Conlon
P. Etienne
J. Humphrey
G. Murdoch
V. Guthrie
J. Beevers(1)
Executives
S. Leonard
G. Sturzenegger
C Jenney(2)
P. Le Roux
M. Ahmad
350,000
229,288
207,500
212,500
204,424
27,625
507,761
629,981
563,218
755,568
397,708
100,342
116,225
145,942
165,600
91,035
–
–
–
162,207
–
Total
5,573,881
998,004
162,207
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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(3)
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
49,479
139,814
145,908
165,066
158,001
–
–
–
100,578
–
–
–
189,629
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-
–
–
–
–
–
–
25,292
24,787
1,710,293
58%
3,627,540
25,292
–
21,788
22,313
–
2,901
25,292
–
18,969
77,839
55,782
–
–
–
–
–
–
–
–
–
–
–
–
8,458
–
9,387
–
–
351,645
421,737
378,060
540,770
217,673
0%
0%
0%
0%
0%
0%
45%
46%
47%
42%
41%
375,292
229,288
229,288
234,813
204,424
30,526
993,498
1,167,943
1,115,576
1,701,984
762,198
275,468
42,632
3,620,178
43% 10,672,370
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
Total
4,399,923
991,174
100,578
189,629
242,139
59,876
3,087,956
43%
9,071,275
(1) Appointed effective 1 May 2023
(2) Promoted to KMP role effective 3 October 2022
(3) Resigned effective 31 December 2021
46
www.LynasRareEarths.comDirectors’ Report
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 2023.
Balance
at beginning
of year
Purchased
during the
year
On exercise of
performance
rights
Sold during
the year
Other
Balance at
end of year
Name
A. Lacaze
K. Conlon
P. Etienne
J. Humphrey
G. Murdoch
V. Guthrie
J. Beevers
S. Leonard
G. Sturzenegger
C. Jenney
P. Le Roux
M. Ahmad
2,646,146
130,635
75,284
56,494
161,007
10,000
–
–
500,000
–
125,519
45,187
–
–
–
–
–
5,000
–
–
–
–
–
–
479,455
–
–
–
–
–
–
7,492
105,618
2,157
110,588
84,424
(230,147)
–
–
–
–
–
–
–
–
–
(33,176)
(25,328)
–
–
–
–
–
–
–
–
–
–
–
–
–
2,895,454
130,635
75,284
56,494
161,007
15,000
–
7,492
605,618
2,157
202,931
104,283
4,256,355
Total
3,750,272
5,000
789,734
(288,651)
Other movements in relation to KMP shareholdings relate to the person starting 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
BE
BF
BG
BI
BJ
BI
BJ
BL
BM
BO
BP
BQ
BR
BS
BT
BU
BV
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
29 November 2021
29 November 2021
1 September 2022
29 November 2022
17 February 2023
17 February 2023
29 November 2022
29 November 2022
90,961
136,435
163,722
163,650
163,650
208,856
208,856
64,710
64,710
74,636
74,636
74,655
39,045
187,246
187,246
128,804
128,804
26 August 2022
26 August 2022
26 August 2022
09 September 2023
09 September 2023
09 September 2023
09 September 2023
31 August 2024
31 August 2024
31 August 2024
31 August 2024
25 August 2023
25 August 2023
25 August 2025
25 August 2025
25 August 2025
25 August 2025
26 August 2024
26 August 2024
26 August 2024
09 September 2025
09 September 2025
09 September 2025
09 September 2025
31 August 2026
31 August 2026
31 August 2026
31 August 2026
25 August 2023
25 August 2023
25 August 2027
25 August 2027
25 August 2027
25 August 2027
$ 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
Total
2,160,622
Value per
performance
right at
grant date
$2.29
$2.29
$1.63
$1.79
$2.40
$2.50
$3.56
$5.23
$7.60
$5.68
$8.57
$8.70
$8.54
$8.29
$4.50
$8.54
$4.97
47
Lynas Rare Earths Limited | 2023 Annual Report Directors’ Report
Remuneration Report – Audited continued
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 2023:
PR’s issued to employees other than CEO
PR’s issued to CEO
Series BQ
Series BS
Series BT
Series BR
Series BU
Series BV
Grant date
5 day VWAP
Exercise price
Dividend yield
Expected volatility
Risk-free Rate
Expiry date
1 Sept 2022
$8.70
$0.00
Nil
50%
3.22%
25 Aug 2023
17 Feb 2023
$8.29
$0.00
Nil
50%
3.49%
25 Aug 2027
17 Feb 2023
$4.50
$0.00
Nil
50%
3.49%
25 Aug 2027
1 Sept 2022
$8.53
$0.00
Nil
50%
3.22%
25 Aug 2023
29 Nov 2022
$8.54
$0.00
Nil
50%
3.22%
25 Aug 2027
29 Nov 2022
$4.97
$0.00
Nil
50%
3.22%
25 Aug 2027
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
1 September 2022
17 Feb 2023
17 Feb 2023
29 November 2022
29 November 2022
29 November 2022
Number of
performance
rights
Fair value per
instrument at
valuation date
Exercise
price per
instrument
First exercise date
Last exercise
or expiry date
74,655
187,246
187,246
39,045
128,804
128,804
$8.81
$4.50
$8.31
$8.53
$4.97
$8.53
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
$ 0.00
25 August 2023
25 August 2023
25 August 2025
25 August 2027
25 August 2025
25 August 2027
25 August 2023
25 August 2023
25 August 2025
25 August 2027
25 August 2025
25 August 2027
Total
745,800
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.
48
www.LynasRareEarths.com The following tables outline the Performance Rights granted for the benefit of Directors and KMP during the 2022
and 2023 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 2023
A. Lacaze
K. Conlon
P. Etienne
J. Humphrey
G. Murdoch
V. Guthrie
J. Beevers
S Leonard
G. Sturzenegger
P. Le Roux
M. Ahmad
C. Jenney
1,483,028
296,653
29 Nov 2022
(479,455)
(45,474)
(228,276)
1,254,752
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
103,586
238,982
284,570
189,696
27,709
74,091
86,437
119,355
67,703
101,561
17 Feb 2023
17 Feb 2023
17 Feb 2023
17 Feb 2023
17 Feb 2023
(7,492)
(105,618)
(110,588)
(84,424)
(2,157)
-
-
-
-
-
-
-
(9,858)
(9,943)
(7,916)
-
-
-
-
-
-
-
-
-
-
-
-
-
66,599
(29,039)
(1,176)
(24,637)
99,404
170,185
209,943
283,394
165,059
127,113
Total
2,327,571
745,800
(789,734)
(73,191)
(117,125)
2,210,446
30 June 2022
A. Lacaze
K. Conlon
P. Etienne
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 FY2021 STI perfor-
mance rights which were subject to condition that Mr Leung remain employed at the vesting date in September 2022. LTI performance
rights issued to Mr Leung in 2020 and 2021 remained on foot until their respective vesting date, at which time the performance rights
will vest or forfeit in accordance with the rules of the LTI Plan based on whether the performance conditions have been achieved. Based
on Mr Leung’s status as a ‘good leaver’, the Board did not exercise its discretion to cancel these LTI performance rights
At 30 June 2023, 391,118 performance rights issued to A. Lacaze had vested and were exercisable (30 June 2022:
429,045). No other KMP had any performance rights that had vested and were exercisable (30 June 2022: nil).
49
Lynas Rare Earths Limited | 2023 Annual Report Remuneration Report – Audited continued
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, 29 August 2023
50
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 guarantees
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, 29 August 2023
51
Lynas Rare Earths Limited | 2023 Annual Report Auditor’s Independence
Declaration
52
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 2023, 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 29 August 2023 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 2023, 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 29 August 2023 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
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
11 Mounts Bay Road
(collectively the Group), which comprises the consolidated statement of financial position as at 30
Perth WA 6000 Australia
June 2023, the consolidated statement of profit or loss and other comprehensive income, the
GPO Box M939 Perth WA 6843
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
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Independent auditor’s report to the members of Lynas Rare Earths Limited
Act 2001, including:
Report on the audit of the financial report
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Opinion
b.
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
Basis for opinion
June 2023, 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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
then ended, notes to the financial statements, including a summary of significant accounting policies,
those standards are further described in the Auditor’s responsibilities for the audit of the financial
and the directors’ declaration.
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
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Act 2001, including:
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. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
the Code.
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
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
for our opinion.
Basis for opinion
Key audit matters
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Key audit matters are those matters that, in our professional judgment, were of most significance in
those standards are further described in the Auditor’s responsibilities for the audit of the financial
our audit of the financial report of the current year. These matters were addressed in the context of
report section of our report. We are independent of the Group in accordance with the auditor
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
independence requirements of the Corporations Act 2001 and the ethical requirements of the
a separate opinion on these matters. For the matter below, our description of how our audit addressed
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
the matter is provided in that context.
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
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
the Code.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
material misstatement of the financial report. The results of our audit procedures, including the
for our opinion.
procedures performed to address the matter below, provide the basis for our audit opinion on the
accompanying financial report.
Key audit matters
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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.
53
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 | 2023 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 2023, 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:
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
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
Independent auditor’s report to the members of Lynas Rare Earths Limited
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
Basis for opinion
Report on the audit of the financial report
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Opinion
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
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
independence requirements of the Corporations Act 2001 and the ethical requirements of the
(collectively the Group), which comprises the consolidated statement of financial position as at 30
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
June 2023, the consolidated statement of profit or loss and other comprehensive income, the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
then ended, notes to the financial statements, including a summary of significant accounting policies,
the Code.
and the directors’ declaration.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
for our opinion.
Act 2001, including:
Key audit matters
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
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
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
Basis for opinion
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 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
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
report section of our report. We are independent of the Group in accordance with the auditor
financial report section of our report, including in relation to this matter. Accordingly, our audit
independence requirements of the Corporations Act 2001 and the ethical requirements of the
included the performance of procedures designed to respond to our assessment of the risks of
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
material misstatement of the financial report. The results of our audit procedures, including the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
procedures performed to address the matter below, provide the basis for our audit opinion on the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
accompanying financial report.
the Code.
A member firm of Ernst & Young Global Limited
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.
54
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 2023, 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 29 August 2023
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
Independent auditor’s report to the members of Lynas Rare Earths Limited
Report on the audit of the financial report
Independent auditor’s report to the members of Lynas Rare Earths Limited
Opinion
Restoration and rehabilitation
Report on the audit of the financial 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
Opinion
How our audit addressed the key audit matter
Why significant
June 2023, 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
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
then ended, notes to the financial statements, including a summary of significant accounting policies,
(collectively the Group), which comprises the consolidated statement of financial position as at 30
and the directors’ declaration.
June 2023, 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
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.
The Group incurs obligations for asset and site
restoration and rehabilitation, which includes
requirements under its Full Operating Stage License
in Malaysia to manage water leached purification
(WLP) and neutralisation underflow (NUF) residues
arising from its production process. As at 30 June
2023 the Group’s consolidated statement of financial
position includes provisions of $170,303,000 in
respect of such obligations as disclosed in Note D.5.
► Inquired with the Group’s expert of changes to
the disturbed areas since the previous annual
reporting period.
cost estimates and other assumptions
underpinning the cost estimates.
► Assessed the appropriateness of the changes in
► With the involvement of our subject matter
Our audit procedures included the following:
Basis for opinion
► Assessed the qualifications, competence 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 2023
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
specialists we assessed the appropriateness of
and of its consolidated financial performance for the year ended on that date; and
the rehabilitation cost estimates.
b.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
objectivity of the Group’s external experts, the
work of whom, formed the basis of the Group’s
initial rehabilitation cost estimates for Lynas
Advanced Materials Plant (LAMP), Kalgoorlie
Rare Earths Facility and Mt Weld sites.
Estimating the costs associated with these obligations
requires significant judgement in relation to when the
activities will take place, the costs associated with the
activities and economic assumptions such as discount
rates and inflation rates. Given the significant
judgements and assumptions involved, the Group is
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
required to continually reassess and confirm that the
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
assumptions used are appropriate.
► Inquired about any changes in license conditions
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Basis for opinion
with respect to the management of WLP and NUF
report section of our report. We are independent of the Group in accordance with the auditor
residues and assessed the appropriateness of
Due to the value of the provision relative to total
independence requirements of the Corporations Act 2001 and the ethical requirements of the
changes in assumptions and calculations within
liabilities and the significant degree of estimation and
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
the rehabilitation cost estimates as a result of
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
judgment used to determine the rehabilitation
those standards are further described in the Auditor’s responsibilities for the audit of the financial
these changed conditions.
provision this was considered to be a key audit
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
report section of our report. We are independent of the Group in accordance with the auditor
matter.
► Tested the mathematical accuracy of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
independence requirements of the Corporations Act 2001 and the ethical requirements of the
rehabilitation models and assessed the
the Code.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
appropriateness of the assumed timing of
cashflows, inflation and discount rate
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
assumptions.
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
for our opinion.
the Code.
► Agreed payments made during the year in
connection with the rehabilitation of WLP to bank
statements.
► Assessed the appropriateness of the
Key audit matters
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
classification of the rehabilitation provision as a
Key audit matters are those matters that, in our professional judgment, were of most significance in
current and non current liability at 30 June
our audit of the financial report of the current year. These matters were addressed in the context of
Key audit matters
2023.
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
► Assessed the adequacy of the disclosures relating
a separate opinion on these matters. For the matter below, our description of how our audit addressed
Key audit matters are those matters that, in our professional judgment, were of most significance in
to the Group’s provisions for restoration and
the matter is provided in that context.
our audit of the financial report of the current year. These matters were addressed in the context of
rehabilitation in the Notes to the financial
statements.
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
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.
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 have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
procedures performed to address the matter below, provide the basis for our audit opinion on the
financial report section of our report, including in relation to this matter. Accordingly, our audit
accompanying financial report.
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
A member firm of Ernst & Young Global Limited
procedures performed to address the matter below, provide the basis for our audit opinion on the
Liability limited by a scheme approved under Professional Standards Legislation
accompanying financial report.
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
55
Lynas Rare Earths Limited | 2023 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
Information other than the financial report and auditor’s report thereon
Report on the audit of the financial report
The directors are responsible for the other information. The other information comprises the
Opinion
information included in the Company’s 2023 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,
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual
(collectively the Group), which comprises the consolidated statement of financial position as at 30
report after the date of this auditor’s report.
June 2023, 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
Our opinion on the financial report does not cover the other information and we do not and will not
then ended, notes to the financial statements, including a summary of significant accounting policies,
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and the directors’ declaration.
and our related assurance opinion.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
In connection with our audit of the financial report, our responsibility is to read the other information
Act 2001, including:
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
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
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
required to report that fact. We have nothing to report in this regard.
Basis for opinion
Responsibilities of the directors for the financial report
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
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
Key audit matters are those matters that, in our professional judgment, were of most significance in
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
our audit of the financial report of the current year. These matters were addressed in the context of
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
audit conducted in accordance with the Australian Auditing Standards will always detect a material
a separate opinion on these matters. For the matter below, our description of how our audit addressed
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
the matter is provided in that context.
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
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
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
included the performance of procedures designed to respond to our assessment of the risks of
judgment and maintain professional scepticism throughout the audit. We also:
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
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 2023, 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 29 August 2023
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2023 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,
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.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
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
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
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.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
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
operations, or have no realistic alternative but to do so.
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
Auditor’s responsibilities for the audit of the financial 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
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
Independent auditor’s report to the members of Lynas Rare Earths Limited
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
Report on the audit of the financial report
if, individually or in the aggregate, they could reasonably be expected to influence the economic
Independent auditor’s report to the members of Lynas Rare Earths Limited
decisions of users taken on the basis of this financial report.
Opinion
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
Report on the audit of the financial report
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
judgment and maintain professional scepticism throughout the audit. We also:
(collectively the Group), which comprises the consolidated statement of financial position as at 30
Opinion
June 2023, the consolidated statement of profit or loss and other comprehensive income, the
► Identify and assess the risks of material misstatement of the financial report, whether due to
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
then ended, notes to the financial statements, including a summary of significant accounting policies,
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
(collectively the Group), which comprises the consolidated statement of financial position as at 30
and the directors’ declaration.
detecting a material misstatement resulting from fraud is higher than for one resulting from
June 2023, the consolidated statement of profit or loss and other comprehensive income, the
A member firm of Ernst & Young Global Limited
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
Liability limited by a scheme approved under Professional Standards Legislation
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
override of internal control.
then ended, notes to the financial statements, including a summary of significant accounting policies,
Act 2001, including:
and the directors’ declaration.
► Obtain an understanding of internal control relevant to the audit in order to design audit
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
and of its consolidated financial performance for the year ended on that date; and
opinion on the effectiveness of the Group’s internal control.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
estimates and related disclosures made by the directors.
and of its consolidated financial performance for the year ended on that date; and
Basis for opinion
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
and, based on the audit evidence obtained, whether a material uncertainty exists related to
those standards are further described in the Auditor’s responsibilities for the audit of the financial
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
Basis for opinion
report section of our report. We are independent of the Group in accordance with the auditor
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
independence requirements of the Corporations Act 2001 and the ethical requirements of the
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
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
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
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
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
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
cease to continue as a going concern.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
the Code.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
► 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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
disclosures, and whether the financial report represents the underlying transactions and events
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
for our opinion.
in a manner that achieves fair presentation.
the Code.
Key audit matters
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
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
responsible for our audit opinion.
Key audit matters
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
We communicate with the directors regarding, among other matters, the planned scope and timing of
Key audit matters are those matters that, in our professional judgment, were of most significance in
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 of the current year. These matters were addressed in the context of
identify during our audit.
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
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
We also provide the directors with a statement that we have complied with relevant ethical
the matter is provided in that context.
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
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
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
procedures performed to address the matter below, provide the basis for our audit opinion on the
taken to eliminate threats or safeguards applied.
financial report section of our report, including in relation to this matter. Accordingly, our audit
accompanying financial report.
included the performance of procedures designed to respond to our assessment of the risks of
From the matters communicated to the directors, we determine those matters that were of most
material misstatement of the financial report. The results of our audit procedures, including the
A member firm of Ernst & Young Global Limited
significance in the audit of the financial report of the current year and are therefore the key audit
procedures performed to address the matter below, provide the basis for our audit opinion on the
Liability limited by a scheme approved under Professional Standards Legislation
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
accompanying financial report.
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
A member firm of Ernst & Young Global Limited
should not be communicated in our report because the adverse consequences of doing so would
Liability limited by a scheme approved under Professional Standards Legislation
reasonably be expected to outweigh the public interest benefits of such communication.
57
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Lynas Rare Earths Limited | 2023 Annual Report
► Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit
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.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Independent Auditor’s Report
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
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 also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
Independent auditor’s report to the members of Lynas Rare Earths Limited
taken to eliminate threats or safeguards applied.
Report on the audit of the financial report
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
Opinion
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
We have audited the financial report of Lynas Rare Earths Limited (the Company) and its subsidiaries
should not be communicated in our report because the adverse consequences of doing so would
(collectively the Group), which comprises the consolidated statement of financial position as at 30
reasonably be expected to outweigh the public interest benefits of such communication.
June 2023, 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,
A member firm of Ernst & Young Global Limited
and the directors’ declaration.
Liability limited by a scheme approved under Professional Standards Legislation
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 2023
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.
58
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 2023, 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 29 August 2023 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report on the audit of the Remuneration ReportOpinion on the Remuneration ReportWe have audited the Remuneration Report included in pages 31 to 49 of the directors’ report for theyear ended 30 June 2023.In our opinion, the Remuneration Report of Lynas Rare Earths Limited for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001.ResponsibilitiesThe 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 29 August 2023
Financial Statements
as at 30 June 2023
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
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. Production and exploration assets
B.1. 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.
Interest Bearing Liabilities
C.3. Financing facilities
C.4. Contributed equity
C.5. Reserves
59
64
64
66
66
69
70
71
75
75
79
81
81
82
84
85
86
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. Entities under a Deed of Cross Guarantee
E.7. Employee costs and share based payments
E.8. Other items
E.9. Subsequent events
60
61
62
63
89
89
89
91
92
92
95
95
95
97
97
98
98
100
105
105
59
Lynas Rare Earths Limited | 2023 Annual Report Financial Statements
Consolidated Statement of Profit or Loss
and Comprehensive Income
For the year ended 30 June 2023
In A$’000
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 income / (expenses)
Profit before income tax
Note
2023
2022
A.1
A.1
A.1
A.2
A.2
739,279
(399,888)
920,014
(348,381)
339,391
571,633
(54,249)
32,183
(1,821)
(42,927)
11,705
229
315,504
540,640
36,355
(4,024)
32,331
4,636
(9,520)
(4,884)
347,835
535,756
Income tax (expense) / benefit
A.4
(37,169)
5,068
Profit for the year
310,666
540,824
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
(31,577)
16,951
Total other comprehensive (loss) / income for the year, net of
income tax
Total comprehensive income for the year attributable to equity
holders of the Company
(31,577)
16,951
279,089
557,775
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
34.05
33.92
59.95
59.70
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
notes to the financial statements.
60
www.LynasRareEarths.com Consolidated Statement
of Financial Position
as at 30 June 2023
In A$’000
Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Total current assets
Inventories
Property, plant and equipment
Deferred development expenditure
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Liabilities
Interest payable
Trade and other payables
Borrowings
Current tax liability
Employee benefits
Provisions
Lease liabilities
Total current liabilities
Borrowings
Employee benefits
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Retained earnings / (Accumulated losses)
Reserves
Note
2023
2022
C.1
D.1
D.2
D.2
B.1
B.1
A.4
D.3
D.4
C.2
D.5
D.5
C.2
D.5
D.5
C.4
C.5
1,011,212
59,574
3,899
111,893
965,584
109,866
6,712
81,462
1,186,578
1,163,624
12,882
1,294,511
49,693
1,401
8,959
84,651
851
757,346
48,996
737
11,344
78,734
1,452,097
898,008
2,638,675
2,061,632
265
82,004
10,004
25,846
5,084
37,264
4,514
1,674
64,932
21,903
5,685
4,206
23,695
1,531
164,981
123,626
167,375
1,414
133,039
8,462
310,290
475,271
164,898
978
124,385
2,131
292,392
416,018
2,163,404
1,645,614
2,091,089
135,896
(63,581)
1,859,598
(174,770)
(39,214)
Total equity attributable to the equity holders of the Company
2,163,404
1,645,614
The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.
61
Lynas Rare Earths Limited | 2023 Annual Report Financial Statements
Consolidated Statement
of Changes in Equity
For the year ended 30 June 2023
In A$’000
l
a
t
i
p
a
c
e
r
a
h
S
e
t
o
N
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
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
e
v
r
e
s
e
r
t
n
a
r
r
a
W
l
a
t
o
T
i
s
g
n
n
r
a
e
d
e
n
a
t
e
R
i
Balance at 1 July 2022
1,859,598
(174,770)
(119,570)
58,591
21,765
1,645,614
Other comprehensive loss for the year
Total profit for the year
Total comprehensive
profit for the year
–
–
–
–
(31,577)
310,666
–
310,666
(31,577)
Issue of shares
Employee remuneration settled
through share-based payments
C.4
E.7
231,491
–
–
–
–
–
–
–
–
–
7,210
–
–
–
–
–
(31,577)
310,666
279,089
231,491
7,210
Balance at 30 June 2023
2,091,089
135,896
(151,147)
65,801
21,765 2,163,404
Balance at 1 July 2021
1,859,598
(715,594)
(136,521)
54,172
21,765
1,083,420
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
–
–
–
–
16,951
540,824
557,775
4,419
Balance at 30 June 2022
1,859,598
(174,770)
(119,570)
58,591
21,765 1,645,614
The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.
62
www.LynasRareEarths.com
Consolidated Statement
of Cash Flows
For the year ended 30 June 2023
In A$’000
Note
2023
2022
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
820,837
(397,170)
(6,209)
(16,095)
(14,609)
855,012
(319,887)
(55,967)
(18,404)
(682)
Net cash from operating activities
C.1
386,754
460,072
Cash flows from investing activities
Payments for property, plant and equipment and development expenditure
(595,516)
(186,302)
Grants received in relation to property, plant and equipment
Security bonds paid
Security bonds refunded
Interest received
Deposit as collateral for AELB
Redemption of 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
Repayment of lease liabilities
Repayment of borrowings
15,378
(1,180)
122
31,358
(4,664)
6,826
(5,655)
10
3,943
(2,423)
–
100,000
(554,502)
(83,601)
(6,244)
214,352
(3,151)
(5,955)
(6,556)
–
(1,590)
(5,666)
Net cash provided from / (used in) financing activities
199,002
(13,812)
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
31,254
965,584
14,374
362,659
580,827
22,098
Closing cash and cash equivalents
C.1
1,011,212
965,584
The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.
63
Lynas Rare Earths Limited | 2023 Annual Report Financial Statements
Notes to the Financial Statements
For the year ended 30 June 2023
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 2023 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 29 August 2023.
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 Level 4, 1 Howard St, Perth, Western 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 2023. Information for the comparative year is for the 12 month period ended 30 June 2022.
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.
64
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 2023, 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).
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
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.
65
Lynas Rare Earths Limited | 2023 Annual Report
BASIS OF PREPARATION continued
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 Chief Operating Officer, the VP Major Projects, 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.
34% (FY22:51%) of the Group’s non-current assets are located in Malaysia and the remaining 66% (FY22: 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.
66
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued 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.
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 FY23 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.
67
Lynas Rare Earths Limited | 2023 Annual Report A.1 Segment revenue and expenses continued
In A$’000
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)
For the year ended 30 June 2023
For the year ended 30 June 2022
Rare Earth
operations
Corporate/
Unallocated
Total
Continuing
Operations
Rare Earth
operations
Corporate/
Unallocated
Total
Continuing
Operations
787,123
(47,844)
739,279
(346,177)
(53,711)
339,391
–
–
–
–
–
–
787,123
893,162
(47,844)
26,852
739,279
920,014
(346,177)
(53,711)
(291,897)
(56,484)
339,391
571,633
–
–
–
–
–
893,162
26,852
920,014
(291,897)
(56,484)
571,633
(9,495)
(9,577)
(19,072)
(5,299)
(7,353)
(12,652)
(6,412)
(2,058)
(8,470)
(1,958)
(2,109)
(4,067)
(13,177)
(13,530)
(26,707)
(17,660)
(8,547)
(26,207)
Total general and admin expenses
(29,084)
(25,165)
(54,249)
(24,917)
(18,009)
(42,926)
Other (expenses) / income
Net foreign exchange gain
Profit / (loss) before interest and tax
(“EBIT”)
Other financial income
Financial expenses
Profit before income tax
Income tax (expense) / benefit
Profit for the year
EBIT(2)
Depreciation and amortisation
EBITDA(2)
Included in EBITDA:
Non-cash employee remuneration
settled through share based payments
comprising:
Share based payments expense
for the year
Other income
–
–
(1,821)
32,183
(1,821)
32,183
–
–
229
11,705
229
11,705
310,307
5,197
315,504
546,716
(6,075)
540,641
36,355
(4,024)
347,835
(37,169)
310,666
4,636
(9,520)
535,757
5,068
540,824
310,307
60,123
370,430
5,197
2,058
7,255
315,504
62,181
546,716
58,443
(6,075)
2,109
540,641
60,552
377,685
605,159
(3,966)
601,193
7,210
–
–
1,821
7,210
1,821
4,419
–
–
(229)
4,419
(229)
Adjusted EBITDA (3)
377,640
9,076
386,716
609,577
(4,195)
605,383
Total assets
Total liabilities
1,072,134
(264,544)
1,566,541
(210,727)
2,638,675
(475,271)
1,118,385
(208,699)
943,247
(207,318)
2,061,632
(416,017)
(1) Other general and administration expenses include statutory, consulting, insurance, IT, marketing and general office costs.
(2) EBIT, EBITDA and Adjusted EBITDA are non IFRS measures.
68
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued A.2 Financial income and expenses
In A$’000
Interest income on cash and cash equivalents
Total financial income
Interest expense on financial liabilities:
Interest expense on JARE loan facility
Unwinding of effective interest on JARE loan facility
Non-cash adjustment to financial liabilities
Interest capitalised to qualifying assets
Unwinding of discount on restoration and rehabilitation provision
Interest expense on lease liabilities
Discount unwinding on AELB deposit
Financing transaction costs and fees
Unrealised foreign exchange gain on intercompany balance
Total financial expenses
Net financial income / (expenses)
For the year ended 30 June
2023
36,355
36,355
(5,797)
(7,017)
2,195
12,766
(5,318)
(471)
374
(756)
–
2022
4,636
4,636
(5,729)
(6,754)
977
5,882
(4,026)
(223)
280
(639)
712
(4,024)
(9,520)
32,331
(4,884)
69
Lynas Rare Earths Limited | 2023 Annual Report A.3. Earnings per share
Recognition and measurement
Basic earnings per share amounts are calculated by dividing net loss or profit for the year attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share adjusts the amount used in the determination of the basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential ordi-
nary shares and the weighted average number of additional shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares. Potential ordinary shares are treated as dilutive when, and
only when, their conversion to ordinary shares would decrease earnings per share from continuing operations.
The earnings and weighted average number of ordinary shares used in the calculations of basic and diluted
earnings per share are as follows:
In A$’000
Net earnings attributed to ordinary shareholders
Earnings used in calculating basic earnings per share
As at 30 June
2023
2022
310,666
540,824
310,666
540,824
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)
310,666
540,824
933,815
902,412
912,350
902,168
915,853
905,898
cents per
share
cents per
share
34.05
33.92
59.95
59.70
The following dilutive shares are included in the share base for the calculation of dilutive earnings per share:
As at 30 June
2023
3,503
3,503
2022
3,731
3,731
In A$’000
Performance rights
Total
70
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued A.4.
Income taxes
A.4.1.
Income tax expense
In A$’000
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 expense / (benefit) recognised in the year
Total income tax expense / (benefit) relating to the continuing operations
A.4.2. Reconciliation of income tax to tax expense
In A$’000
Profit before tax for continuing operations
Income tax expense calculated at 30% (2022: 30%)
Add / (deduct):
Effect of expenses that are not deductible and income that is not assessable
in determining taxable profit
Effect of difference in tax rate in subsidiaries and branches
Effect of prior year adjustment in respect of temporary differences
Effect of current year losses not recognised
Tax effect of prior period losses and temporary differences previously
unrecognised, recognised in the current year
Effect of tax exemption due to pioneer status in Malaysia
Total current year income tax expense / (benefit)
For the year ended 30 June
2023
2022
36,088
(1,304)
34,784
2,385
37,169
6,276
–
6,276
(11,344)
(5,068)
For the year ended 30 June
2023
2022
347,835
104,350
535,756
160,727
2,524
(548)
(1,304)
244
1,234
(174)
–
428
–
(167,283)
(68,097)
–
37,169
(5,068)
71
Lynas Rare Earths Limited | 2023 Annual Report A.4
Income taxes continued
A.4.3 Movements in deferred tax balances
Balance
at 30 June
2022
Recognised
in profit
or loss
Relating
to equity
Recognised
in OCI
Balance
at 30 June
2023
In A$’000
Temporary differences
Inventory
Development expenditure
Property plant and equipment
Borrowings
Trade payables
Business related costs
Lease liabilities
Provisions
Foreign Exchange
In A$’000
Temporary differences
Inventory
Development expenditure
Property plant and equipment
Borrowings
Trade payables
Business related costs
Lease liabilities
Provisions
Unrecognised/ recognised deferred tax assets
–
–
Net deferred tax asset recognised
11,344
(2,385)
Balance
at 30 June
2021
Recognised
in profit
or loss
Relating
to equity
Recognised
in OCI
Balance
at 30 June
2022
(981)
(22,124)
(169)
16,285
140
2,594
982
14,617
–
310
(7,629)
(2,963)
1,207
68
(990)
2,882
6,912
(2,182)
11,344
(2,385)
(894)
(18,351)
3,264
10,453
126
3,584
426
14,846
(86)
(3,773)
(3,433)
5,832
13
(990)
556
(229)
13,454
(2,110)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(671)
(29,753)
(3,132)
17,492
208
1,604
3,864
21,529
(2,182)
8,959
–
8,959
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(981)
(22,124)
(169)
16,285
140
2,594
982
14,617
11,344
–
11,344
Unrecognised/ recognised deferred tax assets
(13,454)
13,454
Net deferred tax asset recognised
–
11,344
72
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued A.4.4 Unrecognised deferred tax assets
In A$’000
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
As at 30 June
2023
2022
–
82,896
3,587
60
–
–
–
85,251
2,639
196
–
49,003
Recognition and measurement
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.
73
Lynas Rare Earths Limited | 2023 Annual Report A.4
Income taxes continued
A.4.4 Unrecognised deferred tax assets continued
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).
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 2023, losses in Malaysia
include A$83m (MYR 256m) in business losses. There is uncertainty if the remaining losses will be utilised.
Tax losses in Australia were utilised during the prior year and the recognised deferred asset relates to temporary
timing differences within the Australian tax group.
74
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 cost
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 FY23, a capitalisation rate of 6.7% was
applied. (FY22: 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.
75
Lynas Rare Earths Limited | 2023 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 extrac-
tion of both these elements form the stripping costs. Judgement is required to identify a suitable allocation
basis to apportion the stripping costs between inventory and any stripping assets for each component.
76
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
d
n
a
s
e
r
u
t
x
i
F
s
g
n
i
t
t
fi
e
s
U
f
o
t
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g
R
i
s
t
e
s
s
A
r
e
d
n
u
s
t
e
s
s
A
n
o
i
t
c
u
r
t
s
n
o
c
n
o
i
t
a
t
i
l
i
b
a
h
e
R
t
e
s
s
a
s
t
n
e
m
e
v
o
r
p
m
i
l
d
o
h
e
s
a
e
L
l
a
t
o
T
Development
Expenditure
t
n
e
m
p
o
e
v
e
D
l
e
r
u
t
i
d
n
e
p
x
e
/
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
l
a
t
o
T
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
In A$’000
As at 30 June 2023
Cost
28,281
919,835 9,079
16,500 753,802 222,080
21,226 1,970,803
32,120 40,504 72,624
Accumulated
impairment losses
Accumulated
depreciation
– (184,282)
(385)
–
(268)
–
(7,244)
(192,179)
(3,860)
–
(3,860)
(4,301) (431,004) (6,979)
(4,108)
–
(31,386)
(6,335)
(484,113)
(7,457)
(11,614)
(19,071)
Carrying amount
23,980 304,549
1,715
12,392 753,534 190,694
7,647 1,294,511 20,803 28,890 49,693
Opening cost
28,891
918,536
8,016
5,494 204,703 200,179 20,404 1,386,223
26,049
39,096
65,145
Opening accumulated
impairment and
depreciation
Opening carrying
amount
(4,102) (577,209) (6,760)
(2,260)
(258)
(25,022)
(13,266) (628,877)
(10,664)
(5,485)
(16,149)
24,789 341,327
1,256
3,234 204,445 175,157
7,138 757,346
15,385
33,611 48,996
Additions
Disposals
–
–
6,539
784
12,110 552,562
1,096
573,091
5,915
1,408
7,323
(4,168)
–
–
–
(4,168)
Depreciation expense
(292)
(50,472)
(682)
(2,936)
(6,922)
(604)
(61,908)
–
–
–
–
–
–
–
(497)
(6,129)
(6,626)
–
–
–
25,259
–
–
–
–
–
–
12,766
(14,764)
–
–
–
25,259
12,766
158
–
–
–
–
–
–
–
–
–
–
–
14,246
360
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(517)
(2,923)
(3)
(16)
(1,475)
(2,800)
(141)
(7,875)
Amortisation expense
Change in rehabilitation
obligations
Capitalised interest
Transfers
Foreign currency
translation
Carrying amount
at 30 June 2023
23,980 304,549
1,715
12,392 753,534 190,694
7,647 1,294,511 20,803 28,890 49,693
Restrictions on the title of property plant and equipment and development assets are outlined in Note C.3.
77
Lynas Rare Earths Limited | 2023 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
d
n
a
s
e
r
u
t
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i
F
s
g
n
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t
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s
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f
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g
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i
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A
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A
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R
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v
o
r
p
m
i
l
d
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e
s
a
e
L
l
a
t
o
T
Development
Expenditure
t
n
e
m
p
o
e
v
e
D
l
e
r
u
t
i
d
n
e
p
x
e
/
n
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t
c
u
d
o
r
p
-
e
r
P
t
e
s
s
a
g
n
p
p
i
r
t
S
i
l
a
t
o
T
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
In A$’000
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) (514,883)
(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)
24,789 341,327
1,256
3,234 204,445 175,157
7,138 757,346
15,385
33,611 48,996
Amortisation expense
Change in rehabilitation
obligations
Capitalised interest
Transfers
Foreign currency
translation
Carrying amount
at 30 June 2022
78
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 FY23 (FY22: nil). There was no reversal of prior period impairment
loss recognised in FY23 (FY22: 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, production 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 additional
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”).
79
Lynas Rare Earths Limited | 2023 Annual Report B.2
Impairment of non-current assets continued
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 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 18-year discounted cash flow (DCF) model. The cash flows are
derived from the two-year budget and forecast model that is extrapolated over 18 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 perfor-
mance 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.
80
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
In A$’000
Cash at bank and on hand
Total cash and cash equivalents
Recognition and measurement
As at 30 June
2023
2022
1,011,212
965,584
1,011,212
965,584
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$538.5m in currencies other than Australian dollars, primarily
US$285.6m (30 June 2022: US$92.5m) and MYR 329.7m (30 June 2022: MYR 337.7m).
Reconciliation of the profit for the year with the net cash from operating activities
In A$’000
Profit for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Net financial (income) / expenses
Loss / (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)
Income tax paid
For the year ended 30 June
2023
2022
310,666
540,824
62,180
7,210
(32,331)
2,611
37,169
(32,183)
53,105
(19,170)
17,256
1,059
(6,209)
(14,609)
60,522
4,419
4,884
(230)
(5,068)
(11,705)
(83,923)
(14,678)
20,774
902
(55,967)
(682)
Net cash from operating activities
386,754
460,072
81
Lynas Rare Earths Limited | 2023 Annual Report C.2.
Interest Bearing Liabilities
In A$’000
Current borrowings
JARE loan facility(1)
Total current borrowings
Non-current borrowings
JARE loan facility
Total non-current borrowings
As at 30 June
2023
2022
10,004
10,004
21,903
21,903
167,375
164,898
167,375
164,898
(1) In line with the repayment schedule below, payments of US$2m and US$5m are due on 31 December 2023 and 30 June 2024. These
have been classified as current liabilities at 30 June 2023. The comparative period included two payments of US$2m and $US11.5m in
deferred interest classified as current liabilities at 30 June 2022.
Recognition and measurement
Interest bearing loans and borrowings
Subsequent to initial recognition interest bearing loans and borrowings are measured at amortised cost using the
effective interest method.
KEY ESTIMATES AND JUDGEMENTS
Interest bearing loans and borrowings are measured at amortised cost using the effective interest method.
The effective interest rate is the rate that exactly discounts estimated future cash payments through the
expected life of the financial liability to the amortised cost of the liability. The Group has applied judgement
and determined the appropriate rate for a similar instrument to be 6.5% (FY22: 6.5%). When the Group revises
the estimates of future cash flows, the carrying amount of the financial liability is adjusted to reflect the new
estimate discounted using the original effective rate. Any changes are recognised in the profit or loss.
Fair value and foreign exchange risk
The fair value of borrowings, which have been determined for disclosure purposes, is calculated by discounting the
future contractual cash flows at the current market interest rates that are available for similar financial instruments.
The fair value methodology adopted was categorised as Level 3 in the fair value hierarchy. There has been no
change to the valuation technique during the year. These have been determined as follows:
As at 30 June 2023
As at 30 June 2022
Carrying
amount
Fair
value
Carrying
amount
Fair
value
177,379
164,576
186,801
179,248
177,379
164,576
186,801
179,248
In A$’000
JARE loan facility
82
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Terms and debt maturity schedule
As at 30 June 2023
As at 30 June 2022
Currency
Nominal
interest
rate
%
Date of
maturity
Face
value
A$ ‘000
Face
value
A$ ‘000
Face
value
A$ ‘000
Face
value
A$ ‘000
JARE loan facility
USD
2.5% June 2030
137,000
206,991
152,505
221,703
137,000
206,991
152,505
221,703
Reconciliation of liabilities arising from financing activities
30 June
2022
Cash
flows
Non-cash Movements
30 June
2023
In A$’000
Opening
Balance
Repay-
ments
Effective
Interest
Foreign
Exchange
Adjust-
ment(1)
Addi-
tions(2)
Other(3)
Closing
Balance
JARE loan facility
Lease liability
186,801
3,662
(5,955)
(3,151)
7,017
471
7,137
(116)
(482)
–
–
(17,139)
177,379
12,110
–
12,976
Total
190,463
(9,106)
7,488
7,021
(482)
12,110
(17,139)
190,355
(1) Adjustments to the carrying values of the JARE loan during the year ended 30 June 2023 relate to changes in the cash flow profile
used to measure the carrying value of the loan.
(2) Additions in the non-cash movements in the lease liability during the year ended 30 June 2023 related to finance leases recognised
in line with AASB 16.
(3) Other non-cash movements in the JARE loan facility relate to the settlement of deferred interest due on the loan through shares.
Refer to note C.3.
30 June
2021
Cash
flows
Non-cash Movements
In A$’000
Opening
Balance
Repay-
ments
Effective
Interest
Foreign
Exchange
Adjust-
ment(1)
Addi-
tions(2)
Other
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
186,801
3,662
190,463
(1) Adjustments to the carrying values of the JARE loan during the year ended 30 June 2022 relate to changes in the cash flow profile
used to measure the carrying value of the loan.
(2) Additions in the non-cash movements in the lease liability during the year ended 30 June 2022 related to finance leases recognised
in line with AASB 16.
83
Lynas Rare Earths Limited | 2023 Annual Report
C.3. 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
2023 (30 June 2022: 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.
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
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
Japan will have the following priority supply rights until 2038:
Amount
US$2m
US$5m
US$10m on each date
US$12m on each date
1. Any fundraising will not hinder Lynas’ ability to support Japanese industries diversifying their rare earths
supply sources, in accordance with the Availability Agreement announced on 30 March 2011.
2. Lynas shall ensure that in the event of competing demands from the Japanese market and a non-Japanese
market for the supply by the Borrower or Lynas Malaysia for NdPr produced from the Lynas Malaysia plant,
the Japanese market shall have priority of supply up to 7,200 tonnes per year subject to the terms of the
Availability Agreement and to the extent that Lynas will not have any opportunity loss.
3. JARE has rights of negotiation with Lynas in priority to non-Japanese market customers for the priority supply
to the Japanese market of additional NdPr and Nd products produced by the Lynas 2025 Project.
4. Lynas will continue to prioritize the needs of Japanese customers for the supply of Heavy Rare Earths products
produced, to the extent possible under any agreement with the U.S.
To date, the JARE loan facility has been secured over all of the assets of the Group, other than the Malawi and
Malaysia assets.
84
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued C.4. Contributed equity
As at 30 June
2023
2022
Number
of shares
‘000
Value of
shares
A$ ‘000
Number
of shares
‘000
Value of
shares
A$ ‘000
Balance at the beginning of the year
902,412
1,859,598
901,079
1,859,598
Issue of shares pursuant to exercised performance rights
Issue of shares pursuant to equity raising
1,268
30,135
–
231,491
1,333
–
–
–
Closing balance
933,815
2,091,089
902,412
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 instruments
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.
85
Lynas Rare Earths Limited | 2023 Annual Report C.5. Reserves
In A$’000
Equity settled employee benefits
Foreign currency translation
Warrant reserve
Balance at 30 June
Nature and purpose
As at 30 June
2023
2022
65,801
(151,147)
21,765
58,591
(119,570)
21,765
(63,581)
(39,214)
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.
86
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
2023
Interest Rate Risk
30 June
2022
Interest Rate Risk
Exposure
1.0%
–1.0%
Exposure
1.0%
–1.0%
Impact on Profit
and Equity
Impact on Profit
and Equity
1,011,212
9,885
10,112
99
(10,112)
965,584
(99)
8,694
9,656
86
(9,656)
(86)
In A$’000
Floating rate instruments
Cash and cash equivalents
Other non-current assets
Total
1,021,097
10,211
(10,211)
974,278
9,742
(9,742)
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
Contracted
cash flows
Up to and
including
6 months
Between
6 months
and up to
1 year
Between
1 year and
up to
5 years
Over
5 years
In A$’000
30 June 2023
JARE loan facility
Lease liabilities
177,379
12,976
228,778
15,384
Total
190,355
244,162
30 June 2022
JARE loan facility
Lease liabilities
186,801
3,531
247,755
4,483
Total
190,332
252,238
5,630
2,451
8,081
22,216
901
23,117
10,097
3,115
138,258
8,718
74,793
1,100
13,212
146,976
75,893
5,413
709
113,810
1,673
106,316
1,200
6,122
115,483
107,516
87
Lynas Rare Earths Limited | 2023 Annual Report C.5 Reserves continued
Foreign exchange risk management
The Group’s foreign exchange risks are detailed in the basis of preparation of these financial reports.
There are two elements of foreign exchange risk. Firstly, the Group holds cash, trade receivables and trade payables
currencies other than the functional currency of the Company in which it is held. Movement in the prevailing exchange
rates have an impact on the Group’s profit and equity. Secondly, the Group’s members are exposed to foreign
exchange risk on the translation of its operations that are denominated in currencies other than AUD. The Group’s net
assets denominated in currencies other than the AUD which have the potential of impacting the other comprehensive
income component of the statement of comprehensive income are:
In A$’000
As at 30 June 2023
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 2022
Net exposure of US$ financial assets
Net exposure of A$ financial assets
Net asset exposure – MYR currency
Net asset exposure – US$ currency
Foreign Exchange Risk
–10%
10%
Carrying
Amount
Profit
Equity
Profit
Equity
US$
183,224
A$
60,133
MYR 2,093,861
US$
(5,343)
US$
A$
166,213
799
MYR 1,662,590
US$
(2,661)
21,767
6,525
–
–
16,559
243
–
–
–
–
(61,360)
805
–
–
(49,796)
266
(21,767)
(6,525)
–
–
(16,559)
(243)
–
–
–
–
74,996
(805)
–
–
60,861
(266)
88
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
In A$’000
Trade receivables at fair value
GST / VAT receivables
Other receivables
As at 30 June
2023
49,192
5,920
4,462
2022
105,382
3,226
1,258
Total current trade and other receivables
59,574
109,866
The Group’s exposure to credit risk is primarily in its trade receivables at fair value. As at 30 June 2023 $3.0m (2022:
$2.5m) of trade receivables were past due but not impaired. The full amount of $3.0m has been received subsequent
to 30 June 2023. Where debtors become overdue, the Group maintains regular contact and has a history of collecting
trade receivables in full.
At 30 June 2023, the Group had sales under contract amounting to A$190.0m (US$126.0m) (30 June 2022: A$176.1m
(US$123.3m)) subject to price adjustments. A 5% change in NdPr Pricing at 30 June 2023 would have resulted in an
increase/decrease in the fair value of the trade receivable by $2.3m (2022: $4.2m). At the date of this report, A$25.2m
(US$16.7m) of this amount has been finalised with minimal price adjustments.
Recognition and measurement
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for instruments with maturities greater than 12 months
from the reporting date, which are classified as non-current assets. The Group’s receivables comprise trade and
other receivables (including related party receivables) which are stated at their cost less impairment losses.
Fair value and foreign exchange risk
Given the short-term nature of trade receivables, the carrying amount is a reasonable approximation of fair value.
All trade receivables are held in currencies other than the functional currency of the entity receipting them and
therefore exposed to foreign exchange risk.
D.2.
Inventories
In A$’000
Raw materials and consumables
Work in progress
Finished goods
Total inventories
Current inventories
Non-current inventories
Total inventories
As at 30 June
2023
2022
48,351
54,242
22,182
124,775
111,893
12,882
124,775
28,024
44,979
9,310
82,313
81,462
851
82,313
During the year ended 30 June 2023 inventories of $399.9m (2021: $348.4m) were recognised as an expense. All of
which were included in ‘cost of sales’.
89
Lynas Rare Earths Limited | 2023 Annual Report D.2
Inventories continued
Depreciation recognised in inventories
The Group recognised depreciation on its property, plant and equipment and amortisation on its deferred development
expenditure and intangible assets for the years ended 30 June 2023 and 2022 respectively in the following categories:
Recognised
in General and
Administration
Expense
Recognised
in Inventory
Total
In A$’000
2023
2022
2023
2022
2023
2022
Property, plant and equipment
Deferred development expenditure
Intangibles
Total
7,134
942
394
3,133
694
241
54,871
56,797
62,005
59,930
–
–
–
–
942
394
694
241
8,470
4,068
54,871
56,797
63,341
60,865
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 $53.7m in the year ended 30 June 2023 (2022: $56.5m).
Write downs of inventory
During the year ended 30 June 2023, there were $1.8m of inventory write-downs to net realisable value. (2022: Nil)
Recognition and measurement
Raw materials, work in progress and finished goods
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based either on the
first in first out (“FIFO”) or weighted average principles and includes expenditure incurred in acquiring the inventories
and bringing them to their existing location and condition. In the case of manufactured or refined inventories and
work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses. Inventory expected to be sold or consumed within the next 12 months is classified
as current, with amounts expected to be consumed or sold after this time being classified as non-current.
Engineering and maintenance materials
Engineering and maintenance materials (representing either critical or long order components but excluding
rotable spares) are measured at the lower of cost and net realisable value. The cost of these inventories is based on
the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them
to their existing location and condition. Net realisable value is determined with reference to the cost of replacement
of such items in the ordinary course of business compared to the current market prices.
90
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued D.3. Other non-current assets
In A$’000
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
2023
3,878
6,007
–
15,887
58,879
84,651
2022
3,610
5,084
1
13,387
56,652
78,734
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 $5.6m (FY22: $5.2m).
Recognition and measurement
Financial assets are classified, at initial recognition and subsequently measured at amortised cost, fair value
through other comprehensive income and fair value through profit or loss. The classification of financial assets at
initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business
model for managing them. With the exception of trade receivables, the Group initially measures a financial asset
at its fair value.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs
to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Financial assets at amortised cost
This category is the most relevant to the Group as all deposits in Note D.3 are classified this way. The Group measures
financial assets at amortised cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows, and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are
subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or
impaired. The Group’s financial assets at amortised cost includes trade receivables, and security deposits included
under other non-current financial assets.
91
Lynas Rare Earths Limited | 2023 Annual Report D.4. Trade and other payables
In A$’000
Trade payables
Accrued expenses
Other payables
Total trade and other payables
Current
Non-current
Total trade and other payables
As at 30 June
2023
2022
40,821
24,650
16,533
14,388
23,070
27,474
82,004
64,932
82,004
–
64,932
–
82,004
64,932
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
In A$’000
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
2023
2022
5,084
37,264
42,348
1,414
133,039
4,206
23,695
27,901
978
124,385
134,453
125,363
(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.
92
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 recognises
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, Mt Weld concentration plant and Lynas Kalgoorlie facility. The key areas of uncertainty in esti-
mating 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 rehabilitation
provisions at Lynas Malaysia, Mt Weld and Lynas Kalgoorlie 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 treatment
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 techniques. 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.
93
Lynas Rare Earths Limited | 2023 Annual Report D.5 Provisions and Employee benefits continued
In A$’000
Restoration and Rehabilitation
Balance at the beginning of the year
Provisions made during the year
Provisions paid during the year
Changes to discounts rates
Effects of foreign exchange movement
Unwinding of discount on provision
As at 30 June
2023
2022
148,080
31,779
(6,209)
(6,520)
(2,145)
5,318
174,266
30,804
(55,967)
(9,183)
4,134
4,026
Balance at 30 June
170,303
148,080
KEY ESTIMATES AND JUDGEMENTS
Restoration and rehabilitation expenditure
The Group’s accounting policy for its restoration and rehabilitation closure provisions requires significant
estimates 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 addition 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 rehabilitation has
been updated to reflect the present value of the obligation that exists at 30 June 2023. 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 $6.2m (FY2022: $56.0m) 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 2023.
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.
94
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 (FY22: 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-substance
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
95
Lynas Rare Earths Limited | 2023 Annual Report E.2 Leases and other commitments continued
economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the
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 equipment
(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$7,150).
Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line
basis over the lease term. No leases meeting the low-value criteria were recognised at 30 June 2022 or 30 June 2023.
Exploration commitments
In A$’000
Less than one year
Between one and five years
More than five years
Total
As at 30 June
2023
411
2,006
3,861
6,278
2022
412
1,404
1,013
2,829
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
In A$’000
Less than one year
Total
As at 30 June
2023
2022
240,207
169,145
240,207
169,145
At 30 June 2023 the capital commitments primarily related to the Lynas Kalgoorlie and Mt Weld expansion projects.
96
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued E.3. Auditor remuneration
The following items of expenditure are included in general and administration expenses:
In A$
For the year ended 30 June
2023
2022
Auditor’s remuneration to Ernst & Young (Australia), comprising:
Fees for auditing the statutory financial report of the parent covering the group
299,120
233,347
Fees for other services
Tax Services
Other assurance and agreed upon procedures
Advisory Services
–
–
–
4,370
–
–
Total auditor’s remuneration Ernst & Young (Australia)
299,120
237,717
Auditor’s remuneration to Ernst & Young (other locations), comprising:
Fees for auditing the financial report of any controlled entities
143,508
131,155
Fees for other services
Tax Services
13,240
1,168
Total auditor’s remuneration Ernst & Young (other locations)
156,748
132,323
Total auditor’s remuneration
455,868
370,040
Other tax service fees paid to EY Australia and other locations in FY2022 and FY2023 relate to completion of tax
returns for expatriate employees.
E.4. Subsidiaries
Name of Group entity
Principal activity
Ownership interest
as at 30 June
Country of
incorporation
2023
2022
Lynas Malaysia Sdn Bhd
Operation and development of advanced
material processing plant
Malaysia
100%
100%
Lynas Services Pty Ltd(1)
Provision of corporate services
Mt Weld Holdings Pty Ltd(1)
Holding company
Mt Weld Mining Pty Ltd(1)
Development of mining areas of interest
and operation of concentration plant
Australia
Australia
Australia
Lynas Kalgoorlie Pty Ltd(1)
Development of operations in Kalgoorlie
Australia
Lynas Africa Holdings Pty Ltd(1)
Holding company
Lynas Africa Ltd
Lynas USA LLC
Mineral exploration
Development of processing opportuni-
ties in USA
Australia
Malawi
USA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(1) 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.
97
Lynas Rare Earths Limited | 2023 Annual Report E.5. Parent entity Information
In A$’000
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Share capital
Accumulated deficit
Reserves
Total shareholders’ equity
Loss of the Company
Total comprehensive loss of the parent Company
As at 30 June
2023
2022
359,401
128,266
1,456,589
1,222,661
(10,193)
(24,052)
(177,568)
(186,801)
1,279,021
1,035,860
2,091,089
(1,134,814)
322,746
1,859,598
(1,138,600)
314,862
1,279,021
1,035,860
3,786
3,786
(18,778)
(18,778)
E.6. Entities under a Deed of Cross Guarantee
Pursuant to ASIC Instrument 2016/785 (as amended) dated August 13, 1998, the wholly-owned Australian subsidi-
aries of Lynas Rare Earths Limited are relieved from the Corporations Act 2001 requirements for preparation, audit
and lodgement of financial reports, and Director’s reports.
It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee.
The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of
winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up event occurs
under any other provision of the Act, the Company will only be liable in the event that after six months any creditor has
not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound-up.
The subsidiaries in addition to the Company subject to the deed are specified in Note E.4.
A statement of comprehensive income and statement of financial position, comprising the Company and
controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed
of Cross Guarantee is presented as follows:
98
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued Statement of Financial Position
In A$’000
Cash and cash equivalents
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
Lease liability
Intercompany payables
Total current liabilities
Provisions
Employee benefits
Lease liability
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Share capital
Accumulated deficit
Reserves
Total equity
As at 30 June
2023
2022
689,433
132,756
37,508
763,105
162,414
24,183
859,697
949,702
12,882
825,867
49,693
375,080
69,137
851
126,957
48,996
375,080
72,428
1,332,659
624,312
2,192,356
1,574,419
49,041
265
10,004
4,524
4,433
24,157
1,673
21,903
3,288
–
423,843
168,525
492,110
219,546
64,046
1,414
8,447
167,375
48,286
2,023
–
167,284
241,282
217,593
733,391
437,679
1,458,964
1,136,740
2,091,089
(810,521)
178,396
1,859,597
(888,002)
165,145
1,458,964
1,136,740
99
Lynas Rare Earths Limited | 2023 Annual Report E.6 Entities under a Deed of Cross Guarantee continued
Statement of comprehensive income
In A$’000
Revenue
Cost of sales
Gross profit
Other (expenses)
Foreign exchange gains / (losses)
General and administration expenses net of recoveries
Profit from operating activities
Financial income
Financial expenses
Net financial income / (expenses)
Profit before income tax
Income tax benefit / (expense)
Profit for the year from continuing operations
Other comprehensive loss, net of income tax
Exchange differences on foreign currency transactions
Total other comprehensive income for the year, net of income tax
As at 30 June
2023
2022
217,288
(116,890)
248,028
(106,379)
100,398
141,649
(232)
12,182
(27,076)
85,272
27,220
(64)
(124)
(3,592)
(20,731)
117,201
8,321
(12,255)
27,156
(3,934)
112,427
(34,947)
113,267
5,170
77,480
118,437
–
–
–
–
Total comprehensive income for the year
77,480
118,437
E.7. Employee costs and share based payments
The following items are gross employee costs before recoveries included in general and administration expenses:
In A$’000
Wages and salaries
Superannuation and pension contributions
Employee remuneration settled through share-based payments
Other
Total employee costs
As at 30 June
2023
66,733
6,808
7,210
1,600
82,351
2022
50,942
4,474
4,419
1,003
60,838
100
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:
In A$
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share based payments
As at 30 June
2023
2022
6,734,092
5,491,675
42,632
275,468
59,876
431,768
3,620,178
3,087,956
Total compensation paid to key management personnel
10,672,370
9,071,275
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, 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 Chief Operating Officer, the Group’s General Counsel
& Company Secretary, Vice President – Major Projects and Vice President – Malaysia.
101
Lynas Rare Earths Limited | 2023 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 2023
For the year ended 30 June 2022
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
3,730,556
1,339,227
(1,268,124)
(299,144)
3,502,515
Vested and exercisable at end of year
429,887
0.00
0.00
0.00
0.00
0.00
0.00
4,678,526
727,593
(1,332,975)
(342,588)
3,730,556
429,045
0.00
0.00
0.00
0.00
0.00
0.00
During the year ended 30 June 2023 the Group recognised net share based payment expense of $7.2m
(2022: $4.4m) within the profit and loss component of the statement of comprehensive income. The employee
performance rights outstanding at the end of the year had a nil exercise price and a weighted average remaining
contractual life of 385 days (FY22: 298 days). The performance rights exercised during the year had a weighted
average share price on exercise date of $7.86 (FY22: $6.99).
Performance rights granted in the period
STI Grants
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.
For the year ended 30 June 2023, in addition to the Executive KMP, three members of the Lynas Leadership Team
and twenty eight 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 performance rights are subject to a vesting condition of continued employment at Lynas for a period of
12 months after the grant date.
102
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued LTI Grants
For the CEO, other Executive KMP and Lynas Leadership Team, two vesting conditions apply to the LTI grants made
during FY23:
• Relative Total Shareholder Return (TSR)
• Strategic Targets
Relative TSR –
50% weighting
Relative TSR is assessed over a three year period from 1 July 2022 to 30 June 2025, relative to other
companies in the ASX50 - 150 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%
Strategic Targets
– 50% weighting
The Strategic Target vesting condition is that by 30 June 2025:
• achieving production capacity uplift to 10.5ktpa NdPr;
•
the following Project milestones are successfully achieved:
• by the end of CY2024, the Kalgoorlie plant is ramped up and with capacity to produce
consistently at nameplate capacity;
• completion of the Mt Weld expansion capacity uplift to 12ktpa NdPr equivalent by the
end of CY2024; and
• US HRE and LRE plant constructed and operational by end of CY2025 subject to
finalisation of U.S. Government funding. In the event of delay to the U.S. Government
funding, processing of HRE in another location will satisfy this objective.
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 $7.466 (2022: $7.008)
and were priced using volume-weighted average share prices, Monte Carlo and Binomial valuation methodologies.
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 BQ
Series BS
Series BT
Series BR
Series BU
Series BV
Grant date
5 day VWAP
Exercise price
Dividend yield
Expected volatility
Risk-free Rate
Expiry date
1 Sept 2022
$8.70
$0.00
Nil
50%
3.22%
25 Aug 2023
17 Feb 2023
$8.29
$0.00
Nil
50%
3.49%
25 Aug 2027
17 Feb 2023
$4.50
$0.00
Nil
50%
3.49%
25 Aug 2027
1 Sept 2022
$8.53
$0.00
Nil
50%
3.22%
25 Aug 2023
29 Nov 2022
$8.54
$0.00
Nil
50%
3.22%
25 Aug 2027
29 Nov 2022
$4.97
$0.00
Nil
50%
3.22%
25 Aug 2027
103
Lynas Rare Earths Limited | 2023 Annual Report E.7 Employee costs and share based payments continued
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
BF
BE
BF
BG
BI
BJ
BI
BJ
BL
BM
BO
BP
BQ
BR
BS
BT
BU
BV
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
29 November 2021
29 November 2021
1 September 2022
29 November 2022
17 February 2023
17 February 2023
29 November 2022
29 November 2022
38,768
136,435
90,961
163,722
275,091
517,861
208,856
208,856
186,733
186,733
74,636
74,636
158,686
39,045
441,944
441,944
128,804
128,804
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 2024
31 August 2024
31 August 2024
31 August 2024
25 August 2023
25 August 2023
25 August 2025
25 August 2025
25 August 2025
25 August 2025
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 2026
31 August 2026
31 August 2026
31 August 2026
25 August 2023
25 August 2023
25 August 2027
25 August 2027
25 August 2027
25 August 2027
$ 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
Total
3,502,515
Value per
performance
right at
grant date
$2.34
$2.29
$2.29
$1.63
$1.79
$2.40
$2.50
$3.56
$5.23
$7.60
$5.68
$8.57
$8.70
$8.54
$8.29
$4.50
$8.54
$4.97
104
Financial Statementswww.LynasRareEarths.comNotes to the Financial Statements continued 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 2022.
Several amendments to accounting standards applies for the first time in the current year. However, the adoption
of these new amendments to accounting standards did not have a material impact on the Group’s consolidated
financial statements.
Standards and Interpretations in issue not yet adopted
No Australian Accounting Standards issued but not yet mandatory for the financial year ending 30 June 2023 have
been early adopted. The adoption of these Australian Accounting Standards when effective is not expected to have
a material impact on the Group consolidated financial statements in future periods.
E.9. Subsequent events
On 26 July 2023, Lynas announced that wholly owned subsidiary Lynas Malaysia had filed two judicial review
proceedings before the High Court of Malaya at Kuala Lumpur seeking judicial review of the Malaysian operating
licence conditions prohibiting the import and processing of lanthanide concentrate after 1 January 2024.
On 1 August 2023, Lynas announced that wholly owned subsidiary Lynas USA LLC had signed a follow-on contract with
the United States (U.S.) Department of Defence (DoD) for the construction of the Heavy Rare Earths component of the
Lynas U.S. Rare Earths Processing Facility in Texas. The updated contract is an expenditure-based contract under which
all of Lynas’ properly allocable construction costs will be reimbursed. A contribution by the U.S. Government of approx-
imately US$258 million is currently allocated to the Project. Lynas has completed the purchase of a 149-acre greenfield
site in Seadrift, Texas for the Project.
With the exception of the above, there have been no other events subsequent to 30 June 2023 that would require
accrual or disclosure in this financial report.
105
Lynas Rare Earths Limited | 2023 Annual Report
Mineral Resources and
Ore Reserves
as at 30 June 2023
1. MT WELD RARE EARTH DEPOSIT ORE RESERVES 2023
The Ore Reserve estimation for the Mt Weld Rare Earth Deposit is shown in Table 1, reported above a cut-off grade
of 4.0% Total Rare Earth Oxides (TREO).
TABLE 1: MT WELD RARE EARTH DEPOSIT ORE RESERVES 2023
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
12.0
4.5
16.5
1.2
0.0
1.2
13.2
4.5
17.7
7.9
6.9
7.7
12.5
0.0
12.5
8.3
6.9
8.0
951
312
1,263
148
0
148
1,099
312
1,411
*
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, 2023. The 2023 Ore Reserve update is based upon
depletion of the in-situ ore reserves by mining activities between 1 July 2022 and 30 June 2023. 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.
106
www.LynasRareEarths.com 2. MT WELD RARE EARTH DEPOSIT MINERAL RESOURCES 2023
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 2023
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
15.4
11.4
25.9
52.6
1.7
1.7
17.1
11.4
25.9
54.3
7.1
5.1
3.6
5.0
11.5
11.5
7.6
5.1
3.6
5.2
1,097
574
937
2,608
194
194
1,291
574
937
2,802
*
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, 2023. 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
CATEGORY
Measured
Indicated
Inferred
Total
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
107
Lynas Rare Earths Limited | 2023 Annual Report Mineral Resources and Ore Reserves
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 October 6,
2004. Lynas Rare Earths 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 Mt Weld Mineral Resources is based on information compiled by
Elizabeth Haren, a Competent Person who is a Member and Chartered Professional of the Australasian Institute of
Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Elizabeth Haren is employed as
an associate Principal Geologist by Snowden Optiro, who was engaged by Mt Weld Mining Pty Ltd. Elizabeth Haren
has sufficient experience that is 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 Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Elizabeth Haren consents to the
inclusion in the report of the matters based on her information in the form and context in which it appears.
The information in this report that relates to the Mt Weld Mineral Resources is based on information compiled
by Dr Andrew Scogings, a Competent Person who is a Member of the Australian Institute of Geoscientists and
is a Registered Professional Geoscientist in the field of Industrial Minerals. Andrew Scogings is employed as an
Executive Consultant by Snowden Optiro, who was engaged by Mt Weld Mining Pty Ltd. Dr Scogings has sufficient
experience that is 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
Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr Scogings consents to the inclusion in the
report of the matters based on his information 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
Dr Ganesh Bhat. Dr Bhat is the Principal Geologist to Lynas Rare Earths. Dr. Bhat is a Member of The Australian Institute
of Geoscientists. Dr. Bhat 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). Dr.
Bhat 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 2023 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.
108
www.LynasRareEarths.com 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 2023.
(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
Number
of Shares
Percentage
of Shares
Holders
28,624
18,872
4,581
3,624
191
12,590,140
47,166,516
34,106,389
87,117,491
751,207,724
55,892
932,188,260
1.350
5.060
3.660
9.350
80.590
100.00
The number of shareholders holding less than
a marketable parcel of shares
1,785
68,043
0.01
(B) Distribution of Employee Options/Performance Rights
There are 5,129,731 unlisted employee options / performance rights. The number of beneficial holders, by size of
holding, of employee options / performance rights are:
Holdings Ranges
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–999,999,999
Total
Holders
2
7
15
11
14
49
109
Lynas Rare Earths Limited | 2023 Annual Report Additional Information
(C)
Twenty Largest Shareholders
The names of the twenty largest holders of quoted shares are:
Listed Ordinary Shares
Number
of Shares
% of
Shares
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
316,073,900
33.907%
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3 CITICORP NOMINEES PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5
JAPAN AUSTRALIA RARE EARTHS BV
6 BNP PARIBAS NOMS PTY LTD
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