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Lynas seeks debt restructuring as low rare earth prices weigh on cash flow

Low prices continue to weigh down Lynas Corp. Ltd., which warned it will be unable to pay back debts on the current schedule, as it has been approximately breaking even on a free cash flow basis for several quarters.

The rare earths miner said Sept. 29 that it will not be able to meet its financial obligations and it will have to amend the terms of its loan facilities or arrange alternative sources of funding.

Production levels, foreign currency exchange rates, regulatory environments and rare earths price volatility are risks to Lynas' ability to continue as a going concern.

As a result, the company is implementing strategies to mitigate effects of the low market pricing, including continuing to focus on further reducing operational costs.

The ASX-listed miner narrowed its loss before tax for the fiscal year ended June 30 to A$94.1 million, compared to its year-ago loss of A$118.6 million.

Revenues also improved to A$191.0 million, up from A$144.6 million booked for 2015, as sales volumes grew by 59% on a yearly basis.

Lynas produced 3,897 tonnes of neodymium-praseodymium during the fiscal year, up from 2,258 tonnes produced the year before, while rare earth oxide output increased to 12,630 tonnes from 8,799 tonnes in fiscal 2015.

The increase in production was attributed to improvements in the production process, throughput rates and quality of final output.

The company's main assets include the Mount Weld operation in Western Australia.