The Lynas Rare Earths Ltd (ASX: LYC) share price is flying over 8% higher on its fourth quarter FY21 update.
Lynas is a rare earths miner and producer. Rare earths are used in many electronic devices, such as mobile phones. Lynas is one of the world’s biggest producers of rare earths outside of China.
Lynas Q4 FY21 strong finish
Lynas updated investors on its FY21 fourth quarter results when compared to the third quarter of FY21.
Rare earth production
Total REO (rare earth oxides) production was 3,778 tonnes, this was down on Q3 production of 4,463 tonnes.
Lynas’ NdPr (neodynium-praseodymium – a type of rare earth) production for Q4 was 1,393 tonnes which was a slight improvement on Q3 production of 1,359 tonnes. Lynas said that it was pleased by this when taking into account challenges presented by COVID-19.
Record sales
Lynas said that quarterly sales revenue for Q4 was $185.9 million, up from Q3 of $110 million.
Sales receipts were $192 million, up from the Q3 result of $133 million. Lynas finished with a closing cash balance of $680.8 million at 30 June 2021, which was higher than Q3’s $568.5 million.
Lynas said that both quarterly sales and sales receipts for Q4 represented records for the company.
NdPr markets
The company said that NdPr market prices softened during the quarter, representing a slight correction on the increases in previous months. The average China domestic price for NdPr was US$69.9/kg for the quarter.
Lynas said that demand for catalyst and fluid catalytic cracking (FCC) is back to pre-COVID levels, however the company said it is aware of the effect the pandemic can have on end product demand, logistics and industrial supplies.
Lynas 2025 projects
Management said that progress continued on its Lynas 2025 projects, including the proposed U.S processing facility. Engineering and design work was submitted to the U.S government and is now under evaluation.
Progress on the Kalgoorlie facility has been made on the regulatory front, with the WA Environment Protection Authority (EPA) performing due diligence. Preliminary site works have also commenced at the Kalgoorlie site during the quarter. This included clearing 10 hectares of land, installing temporary site offices, establishing the borrow pit and constructing the kiln pad.
Malaysia facility and COVID-19
Lynas’ management applauded the Malaysian team’s efforts over the pandemic and in the past quarter in particular.
Management said that it is ensuring that it has zero workplace transmissions. It has implemented testing all staff and contractors before being permitted on site and providing accommodation close to the site. Lynas said it has continued to pay and support staff when a staff member has been required to quarantine after being exposed to COVID-19 outside of the workplace.
During the quarter, the Lynas Malaysia team also faced water supply shortages.
Summary thoughts on the Lynas share price
Lynas’ strong results are being reflected in the share price, with it up almost 9% at the time of writing. Lynas seems to be doing well, continuing to grow and moving forward with its strategy despite the pandemic.
I’m happy for other investors to take the lead, and the gains, on this one. I’m not usually an investor in resource shares due to the cyclical nature, there are other ASX growth shares I would consider.
