Lynas share price lifts amid record quarterly result

Rare earth demand continues to lead Lynas to another record breaker…

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Key points

  • The Lynas Rare Earths share price is trading 0.5% higher in the early hours of trade 
  • Strong product demand generates $328 million in quarterly sales, a new record 
  • The company's 2025 foundational projects progress during the 3-month period 

The Lynas Rare Earths Ltd (ASX: LYC) share price is back in view on Tuesday. This follows the release of the company’s quarterly report for the period ending 31 March 2022.

Following the opening bell, shares in the rare earths producer are up 0.5% to $9.88. Prior to this morning, the Lynas share price had tumbled nearly 15% over the past five trading sessions.

Record numbers bring home the bacon for the Lynas share price

  • Record quarterly sales revenue up 61.7% year on year to $327.7 million
  • Sales receipts up 73.5% to $262 million
  • Total rare-earth-oxide (REO) production increased to 4,945 tonnes, up 17.5%
  • Record Neodymium-Praseodymium (NdPr) production of 1,687 tonnes, up 24.1%
  • Average selling price of $64.7 per kilogram, compared to $35.5 per kilogram
  • Closing cash and short-term deposits of $768.4 million, up from $674.2 million

What else happened during the quarter?

Pushing through the challenges posed by COVID-19 and logistics issues, Lynas Rare Earths solidified another record result in its third quarter of FY22.

According to the quarterly report, solid growth in the rare earths market (particularly in sintered Neodymium iron boron) helped push increased sales for Lynas’ LdPr products. In turn, investors are bidding up the Lynas share price today.

The mining company was able to meet this elevated demand by ramping up production. Notably, March witnessed the first time Lynas surpassed 600 tonnes in NdPr production since the beginning of the pandemic.

Furthermore, construction of the Kalgoorlie Rare Earth Processing Facility commenced during the quarter after the company received all the necessary approvals under the Environmental Protection Act.

On an operational level, Lynas’ Mt Weld site continued to undergo debottlenecking initiatives throughout the quarter. The purpose of these activities is to be prepared for higher production rates at Lynas Malaysia.

Importantly, the miner revealed to the market on 1 March that it had discovered rare earth element mineralisation below the current Mt Weld pit. Although, the Lynas share price sank over the proceeding days.

What’s next?

The company’s 2025 projects are a predominant focus for the rare earths producer. With the Kalgoorlie project progressing, the focus may turn towards Lynas’ other 2025 projects. This includes the Unites States Rare Earths Separation Facility.

Currently, Lynas is in the planning phase for this proposed project. From here, the Department of Defence and Lynas have moved forward to detailed discussions on future phases.

Lynas share price snapshot

While the price for rare earth elements has continued to climb this year, the exuberance hasn’t translated into a better share price for Lynas. In fact, shares are down nearly 11% since the beginning of the year.

Though, on a longer time scale, it begins to look more positive. In the past year, shares in the company have gained 57%. Comparatively, the S&P/ASX 200 Index (ASX: XJO) is up only 7% during that time.

Motley Fool contributor Mitchell Lawler owns Lynas Corporation Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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