Sydney-based Lynas Corporation says its rare earths project near Laverton in WA will require $36.5 million more than previously estimated to complete construction.
Sydney-based Lynas Corporation says its rare earths project near Laverton in WA will require $36.5 million more than previously estimated to complete construction.
The estimated capital cost to complete phase one of the concentration plant in WA and the advanced materials plant in Malaysia increased by $36.49 million to $339 million from the previously estimated cost of $302.7 million.
The company said the increase was due to major variations in the engineering, procurement and construction management fee.
Mobilisation to the site in WA has also commenced with the target date for the first ore feed remaining at December 2010.
"As at 31 March 2010 the forecast total cash requirements to start of production of phase one of the Lynas Rare Earths project is $407.32 million. Total cash at bank as at 31 March 2010 was approximately $417million," the company said.
Full statement below.
Lynas Corporation Limited ("Lynas") (ASX code LYC) is pleased to provide the following updates on the construction of the Concentration Plant in Western Australia and the Advanced Materials Plant in Malaysia.
Since the restart of the Lynas Rare Earths Project in November 2009, after a nine month suspension, a major focus of the company has been to review, and progress where necessary, the project engineering with United Group (UGL) to reach a point where the Company could confirm a revised baseline capital cost estimate and schedule.
This work has now been completed by the UGL - Lynas Alliance Team.
The estimated capital cost to complete Phase 1 of both the Concentration Plant in Western Australia and the Advanced Materials Plant in Malaysia is A$339.19 million (previously A$302.7 million). The major variation is a significantly higher Engineering, Procurement and Construction Management (EPCM) fee than in the previous estimate (previously A$100m which has increased to A$136.4). The increase in the EPCM fee has resulted from a necessary revision of all engineering estimates, the undertaking of significant value engineering to keep original plant capital costs within previous projections, and a revision of construction management costs for the Advanced Material Plant in Malaysia.
The previous capital cost estimates are set out on Page 35 of Lynas' ASX announcement dated 1
March 2010.
Mobilization to site in Western Australia occurred in April 2010. The target date of First Ore Feed
in December 2010 remains as previously announced.
Mobilization to site in Malaysia is scheduled to commence this month.
The first construction contractors to mobilize to site will advance the civil works package by commencement of pile capping in preparation for concrete pouring. A detailed review of the schedule anticipates first concentrate feed to the kiln early in the third quarter of 2011 (previously Q2 2011).
The table below shows the updated estimated capital expenditures and operating expenditures for
the period up to first production from Phase 1 of the Lynas Rare Earths Project. Estimated
Page 2 of 3 operating costs during the period of construction have been reduced significantly since the previous estimate.
In Western Australia, the majority of the decrease is due to a reduction of work
shifts at the Concentration Plant until the Advanced Materials Plant in Malaysia is fully
commissioned.
It has also been possible to reduce working capital in Malaysia and the Corporate
Office.
As at 31 March 2010 the forecast total cash requirements to start of production of Phase 1 of the
Lynas Rare Earths project is A$407.32 million. Total cash at bank as at 31 March 2010 was
approximately A$417million.
Dependent on the final capital costs, use of the contingency facility included within the capital
estimate, and the revenue generated during the commissioning and ramp-up of the Advanced
Materials Plant there may be a potential requirement for a working capital facility in the amount of
approximately A$25million during ramp-up of the plant.
As it is not yet clear whether this additional working capital will be required it has not been included in the table below. Lynas has no debt currently and is confident that a normal banking working capital facility will be available for the Company should the need arise.
