LYSDY - Lynas Rare Earths Limited (LYSCF) Q1 2024 Earnings Call Transcript

2023-10-19 23:27:02 ET

Lynas Rare Earths Limited (LYSCF)

Q1 2024 Earnings Conference Call

October 19, 2023 07:00 PM ET

Company Participants

Amanda Lacaze - CEO and MD

Conference Call Participants

Paul Young - Goldman Sachs

Chen Jiang - Bank of America

Daniel Morgan - Barrenjoey

Austin Yun - Macquarie

Al Harvey - JPMorgan

Dim Ariyasinghe - UBS

Regan Burrows - Bell Potter

Presentation

Operator

Good day and thank you for standing by. Welcome to the Lynas Quarterly Results Webcast Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

I would now like to hand over to Lynas. Please go ahead.

Unidentified Company Representative

Good morning and welcome to the Lynas Rare Earths investor briefing for the September quarter of 2023. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director; and joining Amanda are Gaudenz Sturzenegger, CFO; Pol Le Roux, Chief Executive Officer [ph], and Daniel Havas, VP Strategy and Investor Relations.

I’ll now hand over to Amanda. Please go ahead, Amanda.

Amanda Lacaze

Thanks Jen and good morning to everybody. Thank you again for joining us. Well, we have had another busy quarter, which means that we have a jam-packed quarterly report.

To start with, I would just like to highlight what for us is really fabulous news, which is that at Kalgoorlie, all areas which are required for production, construction, and commissioning is now complete and we have switched the kiln on. I say that in quotation marks, it's not quite switching it on, it's not like turning on the light when you walk into the room.

But this is a major milestone and I know that everybody on the team is really very excited that we're there. We now have to go through a heat up cycles and this will be followed with first production. So, we're just going to take just a moment to enjoy that, but I think the team is already very, very much engaged in the next steps.

Moving on and just looking a little at the quarterly results. We had slightly lower production in the first quarter of FY 2024 compared to the final two quarters of FY 2023. That really reflected the fact that we had to do some planned and preventive maintenance on the cracking and leaching facility in maintenance, which we had delayed in the previous quarter.

The results of just over 1,500 tonnes is still very good when we calculated back to a daily production basis taking out the lower equipment availability for the days that we were unable to operate the kilns because we were conducting maintenance.

As I've indicated in the quarterly report, for the first time, actually in the time that I'm being in line is we did not sell every gram reproduced, not because we didn't have enough demand, but as we've explained in the report, we are still managing for potentially different scenarios over the next six months, which may include a variation in our license conditions in Malaysia and certainly, recognizing that any ramp up of a plant of the size and complexity of Kalgoorlie is inherently unpredictable.

So, we have a held some NdPr inventory, within our own warehouses, and we also have NdPr inventory sitting with our distributor to ensure that we will be able to provide supply continuity for our key customers.

In addition, we have actually held some SEG inventory as well, which we're holding for purely commercial reasons. As we see the price continuing to strengthen, it's been sensible to hold some of that back.

The other very big news, which we've included in this quarterly report, is the fact that we have now decided that we will go ahead without upgrade to Lynas downstream operations.

And as we've explained in the report, we need this additional capacity in Solvent Extraction and Product Finishing under either of the two key scenarios that we're considering.

If there is a revision to our license conditions in Malaysia, then certainly we want the downstream plant in Malaysia to be able to process both material, which is processed in the cracking and leaching facility in Malaysia and also the Mixed Rare Earth Carbonate that Malaysia will receive from the Kalgoorlie facility.

If not, as we indicated last quarter, we now are able to produce up to 9,000 tonnes a year once we reach nameplate capacity at Kalgoorlie and so therefore, we need to increase our downstream in Malaysia.

So, this first stage where we'll be making changes to two of our NdPr separation trains in the Solvent Extraction will take us to the 10,500 tonnes, which has always been our FY 2025 -- our Lynas 2025 target. The process that we'll be doing that is completely innovative and is something of which we're very proud because it's an in-house development.

As we look at this, we are conservative as to production in the third quarter because we expect Solvent Extraction circuits will have to equilibrate, come back into balance before we're able to achieve the significant uplift in production for which they'll be designed.

In addition, we will be putting some extra equipment into Product Finishing once again, which will enhance efficiency, continuous precipitation circuits and some new furnaces in that area. They'll take a little longer, but we will be able to take advantage even with our current PF configuration once we have the SX circuit stable and producing.

So, the decision to make these changes in the downstream area as said they needed on any scenario. We're pretty excited to be doing them, but they will affect this quarter and next. And I think we've spoken for some time and foreshadowed the fact that this really -- this financial year is an adjustment here to ensure that we are in the strongest possible position as the market returns to what we hope will be better settings in the near future.

The Mt Weld project continues on track. We're very close to the end of Stage 1. This is a logical time for us to review Stage 2. Scoping costs ensure that we've actually engineered this to give us the best possible efficiencies as we move forward. Our Stage 2 estimate is slightly up on, sort of, the original estimate, but well within the sorts of variations you would expect at this stage of the project.

Of course, during the quarter -- I know we've spoken to you previously about this when we released the annual results, we finalized the heavy rare earth contract with the US Department of Defense. We're pretty excited about it. It's an expenditure-based contract under which all of our properly allocable construction costs will be reimbursed. The team is champing at the bit to move forward on this.

We've had our US-based engineering partners in [Indiscernible] for an extended period of time working with our in-house engineers ensure that we're able to move forward with that project on the most efficient basis possible.

And, of course, in Malaysia, we continue to engage with Malaysian government and the regulators on the conditions associated with our license and indeed also continue to pursue all of our rights under Malaysian [Indiscernible] and we think that this is important as parallel path to the much preferred pathway of actually reaching a better outcome with the regulators and the government.

So, as I said, a jam-packed quarter [ph] and a jam-packed quarterly report, very exciting times for us. Everybody in the business has been, sort of, holding their breath as we wait for Kalgoorlie to come on and a smooth ramp up is now our target -- a smooth and rapid ramp up is now our target. And, also in Malaysia, it's very exciting see us be able to do some of the upgrades we're talking about there.

So, with that, I know there's always loads and loads and loads of questions, so I'll leave us with 50 minutes through to the end of the call, so that I can take as many questions as possible.

Question-and-Answer Session

Operator

Thank you, Amanda. I will now conduct the Q&A session. [Operator Instructions]

Our first question comes from Paul Young from Goldman Sachs. Please go ahead.

Paul Young

Yes, good morning, Amanda. I hope you're well. Fair bit going on in this quarterly as you highlighted. I guess the first question I have is around Kalgoorlie and just the timing on the commissioning, I guess we are -- if you step back, we are probably four or five months like now this project to hitting the kiln. And as you point out, Amanda, we're hoping for a smooth and rapid ramp up, but unfortunately, those things really happen.

So, if I look at the ramp up on potentially the ramp up of Kal and trying to produce enough Rare Earth Carbonate to feed, LAMP, if it does restart post the upgrade in the June quarter next year, that doesn't seem to be a lot of time to -- for the ramp up, that's only effectively four months. So, I guess the question then is what gives the team -- this seems again like a stretch target?

And maybe one point is that really what we're after is some realistic and achievable guidance on the ramp up and yes to 9,000 tonnes and to 12,000 tonnes. So, I'm just struggling to see how we achieve the ramp up in time to restart an expanded LAMP to achieve 750 tonnes per month?

Amanda Lacaze

Thanks Paul. So, as always, a very critical approach, So, as you would have noted, we have aligned these two ramp up phases. So, this means that we are actually giving ourselves, yes, potentially a quarter of pain, but it's one quarter. It's not, sort of, stringing it out over a period of time. So, we will be limited even downstream in Malaysia on the amount that we're able to produce.

And we see that as that's one of the reasons why we've timed this in the way that we have because if we have even a modest ramp up trajectory, then we think that these will be more closely aligned than they might otherwise be.

On the other hand, we very, very possibly will have cracking and leaching and Malaysia operating, in which case, this will be moved.

Paul Young

Okay. Thanks Amanda. And then on LAMP, you're good to see the extra detail on the expansion of LAMP to the 10,500 tonnes per annum. Can you just step through just on that, is it really just the expansion of the -- you said the Product Finishing, but you're also expanding the Solvent Extraction? And I think you've previously said it's quite capital-light. Can you maybe just provide another estimate if you can of what the CapEx -- what CapEx is involved there?

Amanda Lacaze

So, the capital is included in our financial report to the year end. We gave guidance on capital cash costs this year. It is included within there. So, there's no additional cost over and above what we've already provided.

Paul Young

Okay, that's great. And then last one, Amanda, just on the US refinery, still targeting first production in FY 2026. Good to hear that the engineering team, US team has been in Malaysia to et cetera -- to still work through the feed and everything else. But when do you need to start construction do you believe to be able to achieve that FY 2026 target?

Amanda Lacaze

Paul, I'll get Daniel to call you back with that date. We're expecting it will be within this financial year.

Paul Young

Okay. So, within FY 2024, so sort of two-year construction timeframe?

Amanda Lacaze

Yes.

Paul Young

Okay. All right. Thanks Amanda. I'm still working through a bit of detail here. I might join the queue and I'll pass it on.

Amanda Lacaze

Thanks Paul.

Operator

Thank you. Next we have Chen Jiang from Bank of America. Please go ahead.

Chen Jiang

Good morning, Amanda. Two questions from me please. In the release, you mentioned planned shutdown from Malaysia in December quarter as well as March quarter NdPr separation upgrade. Would you please provide some color on your rare earth oxide production and NdPr?

Is that fair to assume your inventory will draw down in the upcoming two quarters despite minimum production from the shutdown and the separation upgrade? So, we won't say a big decline in sales despite minimum production. I have another one after this. Thank you.

Amanda Lacaze

Thanks Chen. Yes, we will see some smoothing because as I said we've built some of that inventory. And the primary reason for that is not smoothing of the revenue, but it is in fact to ensure that we maintain reliable supply to our key customers.

The -- we have provided, sort of, an outline, we will have the lab shut down from mid-November. So, I think it's reasonably easy for most of you and your models to be able to back fold for that.

And we've provided a conservative estimate of somewhere around about 300 tonnes a month for the first quarter of next calendar year followed up by we would expect our first step up in production to occur in the final quarter of this financial year when we'll be able to go up to about 750 tonnes a month, and then finally we'll move up in the following financial year to our target rates in Malaysia.

Chen Jiang

Right, right. Thanks for that Amanda. Second question, just a follow-up, please. Are we -- well, by looking at Kalgoorlie designed the capacity 900 -- 9,000 tonne per annum equivalent NdPr then the separation facility is 10.5%. I'm just wondering, are we still on track to achieve the 12,000 tonne of NdPr equivalent in your Lynas 2025 plan? We are two years -- well, we are less than 18 months away, I guess.

Amanda Lacaze

Yes. So, we will -- each of the phases and I understand that this can be a little bit tricky, but because we've got a number of production phases, we're not a simple miner with just one beneficiation, we have a number of different production phases.

And so our investment decisions are to do the most efficient upgrade in each of those at any particular time. So, Mt Weld, we are upgrading to 12,000 tonnes per annum because that is the logical next step from where we are today.

When we look at then our cracking and leaching capacity, Kalgoorlie will take us to 9,000 tonnes. If we have the variation to our license in Malaysia, in fact, we will have excess capacity well and truly over the 12,000 tonnes in that cracking and leaching stage.

The next logical step would Solvent Extraction is to go to the 10,500 tonnes. And then once we've done that stabilized, then we can consider taking the lab facility up the next step as well.

So, yes, we have slightly different uplifts in capacity as we go through, but we believe we will be able to get all of these aligned to meet our strategic goal of the 12,000 tonnes in 2025.

Chen Jiang

Right. Thanks for that, Amanda. Maybe last question, please. In the release, you mentioned during the shutdown, the Malaysia cracking and leaching stuff will be deployed to Australia to assist with the with the startup process in Kalgoorlie. I'm just wondering what does that mean, like do you allocate the whole team to Australia for to assist Kalgoorlie during the shutdown?

Amanda Lacaze

Not the full team, but key members of the team. We already have about two dozen of our Malaysian people are actually working -- and some have been working for quite an extended period of time in Kalgoorlie. And we are really fortunate. Anyone else who was proposing to start up a rare earth processing plant will not have access to the sorts of skills that we have.

So, when we think about how do we derisk the ramp up phase, bringing in people who have -- and because we retain our people, we've actually got on-site in Kalgoorlie, the same team that commenced the heat up cycle for the kilns in Malaysia a decade ago.

So, we had this enormous amount of own IP in this area. So, we've got those who have already been working with us. As said some for -- some have been actually in Australia for over a year, others for several months.

When we shut down, we will have a number of our operational leaders from the cracking and leaching facility in Malaysia as well as additional technicians who will come to Australia and who will assist in both the ramp up, but also ensuring that our new workforce in Kalgoorlie is trained.

In over the last six months, all those that we have recruited into Kalgoorlie have also been to Malaysia so they can actually see and experience and learn from the fact that we already have a facility operating.

Chen Jiang

Right. That's clear. Good to say you have skilled staff from Malaysia to Kalgoorlie help with the ramp up. Thanks Amanda. Thank you.

Amanda Lacaze

Thank you.

Operator

Thank you. Next we have Daniel Morgan from Barrenjoey. Please go ahead.

Daniel Morgan

Hi Amanda and team. First question is you've given some quantified guidance on best case scenarios for the March and June quarters next year. Should I read this as assuming a positive Malaysian policy change scenario? Under an adverse scenario, I don't get a positive outcome and you rely on just on Kalgoorlie, I imagine you would expect production to be below these levels, is that fair?

Amanda Lacaze

I think that the famous statement about there are the things that we know that we know. There are the things that we know that we don't know. And then there are the things that we don't know that we don't know does really apply when you're talking about, sort of, ramping up a complex plant. So, what we do know is that it will take time to ramp up the plant.

I think that you can see from this that, we're, sort of, -- we're modest in -- so what we're talking about is the potential production in the first quarter of next year. We would love to overshoot that if we do indeed have, sort of, the variation to the license conditions in Malaysia.

But even with the very, very, sort of, best knowledge that we've got modeling the various different, sort of, McNulty [ph] curves and experience based on Malaysia, it is difficult to give you any more precise guidance than what we've already provided in the report.

Daniel Morgan

Okay, understand. Separate question, Malaysia, there was a lot of news in Malaysia in the past couple of months about a new rare earth strategy. How do you read this as a company, is this an opportunity for you? And is this a softening of the government stance potentially towards cracking and leaching in country?

Amanda Lacaze

I think that we all are very pleased that the Malaysian government has recognized the rare earths industry as an engine for growth in the Malaysian economy. I think that there is absolutely a recognition that Malaysia is a step ahead of just about anywhere else because Lynas operates in Malaysia.

And Malaysia has articulated -- the Malaysian government has articulated a desire to both develop their upstream and their downstream. At upstream -- actually, there's upstream, midstream, and downstream capability in country. We see that all as very positive.

Daniel Morgan

And on the separate parallel process, which is the court process -- the high court process. If you are successful in getting a stay, is there any expectation on how long a process can take? I mean I'm not familiar with the court process in Malaysia, kind of happened in days weeks, which I imagine would be a bad outcome for an adverse ruling. But if it's a protracted process and you have a stay, then well you could have a less disruptive time in the first half of 2024 is what I'm thinking.

Amanda Lacaze

Yes. That's like I would never supposed to be able to predict what governments might do or on what timeline they might do it. I would be even more averse to predicting what courts might do and the timeline of it they would do it. So, yes, you are right. It -- this day, we think is an important strategy. And we think that we have a strong argument for why this should be allowed to occur as the matters are considered in front of the court.

Daniel Morgan

Thank you very much Amanda.

Amanda Lacaze

Thanks Daniel.

Operator

Thank you. Our next question comes from Austin Yun from Macquarie. Please go ahead.

Austin Yun

Morning, Amanda and the team. Just two questions from me, please. The first one is to extend a question from Daniel. Just would like to understand given that the comment from Malaysian government, what would be the kind of a potential path from now on? Would you expect the government to start provide additional funding or tax breaks to encourage the development of the industry there? Or would you expect to see a tighter control from the government because they really getting the interest in this part operation? So, just wondering what are you hearing on the ground? I'll come back for the second. Thank you.

Amanda Lacaze

I think based upon -- yes, thanks Austin. I think based upon their public commentary right now that we would expect tighter control. You would have noted that the government and the regulators understand the value of the ionic clay deposits in particular in Malaysia, and that reflects a sort of a geological formation which is common across Southeast Asia.

And so one of the announcements from the government was that they intended to ban export of raw materials, so in its raw mined form. And we would see that as being very positive because we actually know how to separate Mixed Rare Earth Carbonate whether it comes from ionic clay or whether it comes from some other source, we would say that as being very positive.

And I think that this government's intention is to ensure that this is a key focus area economic growth. Malaysia still has an automotive industry and it has aspirations to have a larger and more vigorous automotive industry. Malaysia seeks to be a leader in terms of, sort of, green energy and the energy transition.

And there is a very clear understanding amongst policy makers of the importance of rare earths materials as part of driving those industries. So, I think there will probably be more rather than less control and I think it will be done for the purposes of facilitating industry development in Malaysia.

Austin Yun

Great. Thank you. Second was on the sale volumes for the rest of the year. Do you have any minimal commitment to your customer in terms of NdPr and other risk products for the December and March quarter?

Amanda Lacaze

We -- our commitment to our customer is that we won't disrupt their production by not being able to provide continuity of supply. And so we have a number of strategic customers, many of whom we have been supplying now for eight or nine years. We know what their forecast is and we're managing our inventory to be able to meet that forecast.

Austin Yun

Yes, okay. Thank you. Sorry, if I can just squeeze in one last question. Just on your production capacity expansion to 12,500 tonne NdPr, how should we think about the CapEx for this additional 2,000 tonne of capacity?

Amanda Lacaze

So, it's 10,500 is the step that we're going to in Malaysia and it -- the cost associated with, we call it, the LAMP industrial plan, are already included in the CapEx indication that we've provided with the annual report.

Austin Yun

Yes. I understood that. Just wondering sort of step after the 10,500 is to have a 2,000 tonne of gap, right? Try to understand the CapEx intensity for the last leg of the expansion? Any color you can provide?

Amanda Lacaze

We expect it will still be relatively low capital intensity because as we said what we've done is that we're in this first step where making certain changes to two of our NdPr separation trains. We have four. When we go the next step, it will be changing the other two of our separation trains.

Austin Yun

Thank you.

Operator

Thank you. Next we have Al Harvey from JPMorgan. Please go ahead.

Al Harvey

Yes, morning Amanda. Just a very simple one to start. Just wanted to double check the ramp up next year. The tonnes per month, is that quoted in total rare earth oxide or specifically NdPr oxide?

Amanda Lacaze

NdPr, Al.

Al Harvey

Great. Thank you. And then secondly, just, I guess, indicated that there's been some continued drilling out at Mt Weld, just wanting to understand when we might get the resource update? And if it will include the rare earth oxide split that we haven't had for a while?

Amanda Lacaze

You'll get it as soon as we have finished all of the test work. We're all sitting on the edge of our chairs waiting to be able bring that forward. But we've done a lot of drilling as you can see from the report.

And we've done drilling in -- both within the current life of mine where we've done a lot of additional drilling to understand distribution of elements, not just grade, but also to understand grade.

And then, of course, we had the carbonatite drilling program as well. So, there is a lot of work being done on this. Our team of geos are absolutely flat out. But I can't give you a specific time on that, but we're working on it.

Al Harvey

Great. Thanks Amanda. And maybe just one last one. You mentioned the Malaysian ionic clays. Note that they don't require cracking and leaching. Has there been any discussions on utilizing your Solvent Extraction and Product Finishing for local Malaysian oils, maybe use that as a source of -- a feed there at LAMP?

Amanda Lacaze

Sure.

Al Harvey

Sure. There has been discussions, or sure --

Amanda Lacaze

Yes. I don’t know if you've got a resource or you want to value add to it and you get someone who knows how to do it, but yes. I mean, there's a whole complex of matters associated with how we may or may not feed the LAMP facility, including whether we're able to operate in the ways that it was designed and on the basis on which we made the investment.

So, yes, we have discussions about these various matters. We have no further update to provide on the license at this time. But I can assure you it will all be the first to know once we know.

Al Harvey

Yes, sure. So, yes, I guess I'm just thinking then if there's potential that that could be used as feed, does that potentially give them Malaysian government a little bit of a reason to put off overturning the cracking and leaching band, if you could process their material -- local material with your downstream?

Amanda Lacaze

Well, it just could do, couldn't it, Al?. Yes. So, clearly, as I go back, I'd say, we said it's very positive that the Malaysian government sees the opportunity for development of rare earth industry in Malaysia, both using their upstream capability and further developing downstream capability.

We, of course, have been very active in promoting the value of having the only proven operating rare earth separation plant in Malaysia. We have been very active in providing that to the Malaysian government and the benefits that could accrue to the Malaysian economy.

And we continue to operate, continue to meet all of the regulatory conditions, and we continue to be of the view that the decision should be made which are good for the Malaysian economy and which are also good for Malaysian industry operations, recognizing that we are compliant -- we are compliant with all regulation and we run a safe operation.

So, yes, we have advocated very strongly for the benefit of having the Lynas plant operating in the way that it was designed to operate.

Al Harvey

Sure. Thanks Amanda. Really appreciate it.

Amanda Lacaze

Thanks Al.

Operator

Thank you. Our next question just a moment please. Next we have Dim Ariyasinghe from UBS. Please go ahead.

Dim Ariyasinghe

Thank you. Thanks Amanda and team for the report. Just one quick question from me. On the inventory, obviously, most of it is being managed to accommodate for essential disruption in the next couple of quarters.

But you do make note that you're also withholding some of the SEG stocks in anticipation of higher prices. Can you maybe talk about what sort of quantum in price you'd need to see for you, kind of, deliver back into that market?

Amanda Lacaze

Hi Dim. Yes -- look, I think that we're seeing a significant strengthening in that market sort of already. And we will -- I guess we don't have like a singular number where we'll say we'll do something about it because the way that we sell our ACG is such that we need to have confidence in the both the demand and the price.

But I would suppose that if market trends continue, they are the way that they are now, that we will start to unwind some of that inventory over the next two quarters.

Dim Ariyasinghe

Yes. Awesome. Cool. And then one other just regarding that a lot of the questions on modeling have been answered. This is just -- excuse me, if this is a bit amateur, but in terms of disclosure going forward now, we're going to be probably a bit quiet until next year notwithstanding that there'll be a lot happening with Kalgoorlie and with Malaysia -- like so, will we be getting updates when we get first MREC from Kalgoorlie or is it a case of no news is good news potentially? And apologize.

Amanda Lacaze

Don’t apologize. I -- we're delighted that people want to know, sort of, the detail of the way things are moving forward. I think that as we look at this, we know that it's -- we're only a month from our AGM. We usually like provide a fulsome, sort of, update on what's going on at that time. So, it's not quite as long until sort a next, sort of, normalized update would occur.

But we will certainly disclose anything which is material as and when it occurs. So, -- but don't worry that we won't talk to you until, sort of, late in January. I mean, at a minimum, the AGM becomes a sort of a next point at which we would certainly provide an update.

Dim Ariyasinghe

Yes, cool. Okay. Thank you.

Amanda Lacaze

Thanks Dim.

Operator

Thank you. Our next question comes from Regan Burrows from Bell Potter. Please go ahead.

Regan Burrows

Thank you. Good morning, Amanda and team. Just a couple of questions from me. Firstly, just the impact of a shutdown in November on the Solvent Extraction and Product Finishing plant in Malaysia. Just sort of interested in the quantum of that is it sort of, I guess, similar production levels to this quarter or are we sort of guiding to potentially considerably lower?

Amanda Lacaze

So, basically, it will shut down from mid-November, so we're shut down for half the quarter.

Regan Burrows

Okay. So, that would be a complete shutdown through the end of the quarter?

Amanda Lacaze

Yes.

Regan Burrows

Okay. Cool. And then I guess just as a follow-up on that, you've obviously been stockpiling material for a couple of quarters now. Just interested, I guess, in terms of a -- I guess, a runway or how many quarters you can sort of sustain say, current sales levels, going forward because we don't really have a breakdown of what's NdPr, what's, SEG.

Amanda Lacaze

No. And, it may not surprise you, no, I'm not going to give you that on a tonne-by-tonne basis today either, no.

Regan Burrows

That's fine.

Amanda Lacaze

So, suffice, to say that, as I said, we've been -- as we've indicated across our number of months, we've had detailed scenario planning. And those scenarios have ranged from a very slow ramp up at Kalgoorlie through to what we would hope would be more of the trajectory, and they have included both that we get a variation to our license that continues to operate in Malaysia, or we don't get a variation to our license, in Malaysia.

And so we're managing to that at to ensure that if we do have a very low production quarter in the March quarter of this this financial year, that we will be able to sustain supply to our customers.

Regan Burrows

Okay. So, it will take you through so March, sort of, timeframe. And just, I guess, a final one for the confirming, I guess, Dan's comments earlier, just on the sort of second half ramp up scenario that you've provided in those 300 tonnes per month, stepping up to 750 tonnes in sort of next financial year. Just confirming that that assumes no overturn in the operating license?

Amanda Lacaze

Yes, those are our Solvent Extraction. That's actually the Solvent Extraction capacity that we're indicating there and indeed, we may -- it may be better than that. It depends upon how long it takes for the changes in Solvent Extraction to stabilize. But it's lower production for the March quarter, but then higher in the June quarter. So, we will see some increase towards the back part of this financial year.

Regan Burrows

Okay. Okay. So, I'll -- thanks for that. I'll leave it there.

Amanda Lacaze

Thanks, Reagan. Thank you.

Operator

Thank you. [Operator Instructions] Next we have Paul Young from Goldman Sachs. Please Paul.

Paul Young

Hi, Amanda. It's Paul Young again. Just to clarify Amanda the June quarter of next year, the 750 tonnes per month target, which equates to 9,000 tonnes per annum of NdPr. So, that's the nameplate of Kalgoorlie. So, if it ramps up by then, then you can, in theory, feed 9,000 tonnes to LAMP, but the increment from Mt Weld can do about 7,000 tonnes at the moment.

It's obviously the throughput there and production is all based on the head grade and you've obviously got the environmental approvals for a set amount of ore throughput, right? So, you can flex the head grade and therefore, the concentrate production. But I don't think Mt Weld can do more than about seven increment if I'm wrong.

So, if you're going to achieve the 750 tonnes per month or 9,000 tonnes of NdPr annualized from the June quarter. Is that reliant on maybe what you might have alluded to earlier to a question around potentially feeding in some of those ionic clays in Malaysia into the plant?

Amanda Lacaze

No. Mt Weld actually has proven itself particularly over the last year to be able to do a bit better than the 7,000 tonnes a year because as we indicated in the full year report, we've been able to not only feed Malaysia at -- 7,000 tonne-equivalent, but also build inventory for feedstock for Kalgoorlie

So, yes, I mean, it it's always the case of sort of managing each stage to optimize. But we're very pleased with that well performance at this time, and we think that we've got some headroom to be able to pick up.

Second thing is that with the expansion project, the current bottleneck at Mt Weld is, in fact, in our dewatering circuit. So, the first thing that we will be bringing online with the expansion is the new dewatering circuit, which is substantially upsized from what we have currently.

So, we have previously indicated that Mt Weld it's not a -- it's 7,000 tonnes today and it's 12,000 tonnes tomorrow, but we will have a couple of steps in there as we bring the equipment online, and, of course, this is the benefit of being on a brownfield site.

So, releasing the constraints in the dewatering circuit will give us a step up. So, we're fairly confident about our ability to match these tonnages through the process.

Paul Young

Yes. Okay. That's great, Amanda. So, that means -- just to confirm that means that potentially you could run the December half of next year depending on the production settings in that world and performance, but potentially produce 9,000 tonnes per annum -- a run rate of 9,000 tonnes per annum in the December half of next year.

Amanda Lacaze

Potentially.

Paul Young

Okay. Very interesting. Thank you for that.

Amanda Lacaze

Thanks Paul.

Operator

Thank you. I see no further questions at this time. I'd like to turn the conference back to Amanda for closing remarks. Thank you, Amanda.

Amanda Lacaze

Thanks very much and, look, once again, thanks everybody for joining us this morning. I wish I could reflect and say to you, we've had a really busy quarter and now we're just [Indiscernible] into Christmas, but actually we're looking at another really busy quarter ahead. And certainly, we'll keep you informed as we continue to develop the business.

Operator

Thank you. This concludes today's conference call. Thank you all for participating. You may now disconnect.

Amanda Lacaze

Thank you.

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Lynas Rare Earths Limited (LYSCF) Q1 2024 Earnings Call Transcript