Lynas shares advance on deal with lenders

PERTH (miningweekly.com) – The share price of ASX-listed Lynas advanced to a one-month high on Wednesday after the company announced planned amendments to its debt facilities with JARE and convertible bondholders.

Lynas, which also published its quarterly production report, stated that it planned to extend the terms of both debt facilities by about two years, with the JARE facility maturing in June 2020 and the convertible bond facility maturing in September of the same year.

The interest rates on both debt facilities will also be reduced significantly, with the JARE interest rate falling from the current rate of 6% a year to 2.5% a year, while the convertible bond interest rate will reduce from 2.75% a year to 1.25% a year.

Lynas told shareholders on Wednesday that the interest rates of both the convertible bonds and the JARE facility could be adjusted based on the average sales price of rare earths product.

Over the remaining four-year terms of the facilities, the proposed new rates would save around A$70-million in total interest, the rare earths producer said.

Further, Lynas is hoping to amend the facilities so that no fixed principal repayments from unrestricted cash are due during the term of the facilities, with the miner saying the principal balance of both facilities will be repayable in 2020.

Under the amendments, Lynas will defer until maturity fixed installments of $50-million that were due to JARE under the current agreement, by December 2017.

Under the JARE facility, the fixed principal repayment schedule will also be replaced with a cash sweep mechanism, whereby unrestricted cash balances above A$40-million will be applied as principal repayments.

Furthermore, the conversion price for the convertible bonds will reduce to 10c, and the exchange rate for conversion will be adjusted to 75c to the US dollar.

The bondholders will also be issued more than 348-million warrants, each of which will entitle the warrant holder to one share upon payment of the strike price of 5c a share. The new warrants were exercisable until the new maturity date of the convertible bonds.

The proposed amendments are subject to shareholder approval and Foreign Investment Review Board approval.

Lynas shares traded at a high of 7c a share on Wednesday, up from the previous day’s closing price of 6c a share.

Meanwhile, the company on Wednesday reported rare earths production of 1 180 t during the three months to September, which compared with the 3 727 t produced in the previous quarter.

Production from the Lynas Advanced Materials Plant, in Malaysia, was 90% of the full design rate, which was in line with forecasts. During the quarter under review, and for the next quarter, the objective is stabilising production and quality at these rates, after which production will be slowly increased to full design rates.

Sales volumes for the quarter reached 3 081 t, generating revenues of A$53.8-million. Sales volumes for the September quarter were lower than the previous quarter with a number of shipments of material produced in the quarter dispatched in early October.