JOHANNESBURG (miningweekly.com) – The high level of debt on Lynas’s balance sheet continues to be a challenge in the low-price environment, the lossmaking rare earths miner said on Thursday.
The company raised caution about its ability to meet its financial obligations and stated that it would require either amendments to the terms of its loan facilities or alternative sources of funding. Lynas said it was in negotiations with its lender groups regarding amendments.
“In this low price environment, the Lynas business has been approximately break-even on a free cash-flow basis for several quarters, and accordingly, the high level of debt on the Lynas balance sheet remains a challenge. Throughout the financial year, our lenders have continued to support the businesses.”
Lynas flagged price volatility, production levels, foreign currency exchange rates and the regulatory environment as risks to its ability to continue as a going concern.
The miner, however, reported that it was implementing strategies to mitigate the effect of the low-market pricing, including continuing to focus on opportunities to further reduce operating costs.
Lynas is operating the Mt Weld mine, in Australia, and the Lynas Advanced Materials Plant, in Malaysia. The group achieved sales revenue of A$196.1-million in the 2016 financial year, reflecting increased production volumes and strong relationships with customers in Japan and China.
The miner narrowed its loss from A$118.6-million to A$94.1-million in the year ended June 30.