The Lynas Rare Earths Ltd (ASX: LYC) share price is starting the week positively following the release of the rare earth producer's fourth-quarter update.
In early trade, the Lynas share price is up 3% to $8.30.
Lynas share price higher after fourth-quarter update
- Quarterly sales revenue down 10.3% quarter on quarter to $294.5 million
- Sales receipts up 34% to a record $351 million
- Total REO production down 26.2% to 3,650 tonnes
- Closing cash balance of $965.6 million
What happened during the quarter?
For the three months ended 30 June, Lynas was on form and delivered record sales receipts of $351 million.
The key driver of its record sales were strong rare earth prices. The release notes that the NdPr price was between 70% and 80% higher than at the same time last year. The average China Domestic Price for NdPr during the quarter was US$120/kg.
Complementing this was strong demand for Lynas' products during the quarter, with the majority of its products sold to buyers outside China.
And while its sales revenue was down quarter on quarter, it was still the second highest quarterly result at $294.5 million. Management advised that this was despite its production being slightly lower due to water shortages in Malaysia.
Lynas has implemented a number of mitigating strategies, but the ongoing water shortages from its commercial supplier resulted in several complete or partial temporary production halts during the quarter.
Pleasingly, a process modification has been designed with the objective of decreasing its fresh water consumption by 40%. This modification will be implemented during the July quarter and is expected to substantially reduce Lynas Malaysia's exposure to water supply issues.
Management commentary
Lynas CEO, Amanda Lacaze, was pleased with the company's performance during the final quarter. She said:
I am pleased to report a very strong final quarter for Financial Year 2022 (FY22). Lynas has continued to realise the benefits of robust market pricing and demand despite continued challenges in the external environment. Our year end cash balance of $965.6m provides a confident basis for funding continued growth as demand grows.
Record sales receipts of A$351m were achieved in the quarter. Sales revenue of A$294.5m was the 2nd highest quarterly result recorded reflecting slightly lower production primarily due to water shortages in Malaysia.
