Australian rare earths miner Lynas has widened its full year loss to $107.4 million. Source: AAP
A DEPRESSED rare earths market has forced Lynas to postpone its expansion and renegotiate a $225 million debt facility.
The Australian rare earths miner, one of the world's few non-Chinese producers, will have to start repaying debt next year instead of in 2015.
Repaying the $US225 million in full a year early by 2016 was the condition its Japanese lenders put on the new agreement to waive for 15 months Lynas' previous obligations to ramp up to 'phase two' production and cash margins expansion targets.
On Monday, Lynas reported that it had widened its full year loss to $107.4 million for the 12 months to June 30, from $102.6 million the previous year.
The miner only started selling rare earths products shortly before the end of June, receiving a modest $900,000 first pay cheque.
The debt negotiations were well-received by investors, who still appear bullish about the outlook for rare earths and sent Lynas shares up 3.25 cents, or 8.0 per cent, to 43.75 cents by 1500 AEST.
Lynas had hoped to start producing at its Malaysian plant in 2011 when rare earths prices were booming but fierce opposition from local villagers was fought in the courts, delaying permits.
By the time it won that battle this year, Chinese domestic prices for rare earths products, which have a range of hi-tech industrial uses, had sunk to under $20 a tonne making it hard to be profitable.
The company said last year had been one of significant milestones for Lynas, positioning it to achieve its core objective of becoming the leading sustainable global supplier of rare earth materials to the market.
A successful Lynas would be a game changer for a Chinese-dominated industry, with its fully integrated operations from its Western Australia-based Mt Weld mine - considered the world's best - through to its Malaysian finishing plant.
Patersons analyst Rob Brierley said the move to get out of its phase two expansion for 15 months was a good one that would otherwise have left it under huge financial stress and at risk of defaulting.
He said an end to the depressed market was not yet in sight but Lynas was well placed long term, with a strong resource base and state of the art, low cost concentration and processing plants.
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