Lynas sells US$225m bonds for Mount Weld rare earths refinery

Finance

Nicholas Curtis chairman and chief executive officer of Lynas Corp

Publishing Date: 24 Jan 2012 12:32pm GMT
Author: Mining Journal

Australia-based Lynas Corp has announced the sale of US$225 million in convertible bonds, aimed at providing funds for the company’s proposed advanced materials plant in Gebeng, Malaysia.

The plant is set to refine rare earth metals mined at Lynas’ Mount Weld mine in Western Australia, one of few producing sites outside China. Lynas has applied for a temporary license to operate the plant, and is due to receive a decision from the Malaysian Atomic Energy Licensing Board on January 30.

Mount Kellett Capital Management LP, a US-based investment firm “focused on global distressed, special situations and opportunistic investing” has agreed to an initial purchase of US$50 million of the 4.5-year bonds. The remaining US$175 million are to be bought by Mount Kellett once technical due-diligence and other conditions are met.

Lynas cited an increase in plant construction costs of approximately A$40 million (US$41.8 million) as motivation for the bond issue. The company said it had delayed first production at the plant until the second quarter this year.

In related news, Lynas on January 18 announced an increased resource estimate for its Mount Weld operation. Total resources were increased by 37%, to 23.9Mt at an average grade of 7.9% rare earth oxides.