Lynas share price surges as Q4 revenue hits $185.9 million

Lynas share price surges

Rare earths company Lynas (ASX: LYC) unveiled a bumper set of quarterly results on Monday and the stock rose strongly in response. By 10:40AM the Lynas share price was up 7.62% to $6.92 per share, marking a six-month high for the company.

The stock continued to climb as the session progressed, trading up to $7.00 per share by noon. Below we look at the results that triggered this run.

Fourth quarter results unpacked

Overall, Lynas posted better quarterly revenue, sales receipts, and had a stronger closing cash balance than in the prior corresponding period. The macro environment has also improved, and demand for the company’s products was described as ‘sustained’.

On the top-line, Lynas reported Q4 revenues of $185.9 million, a strong increase from the $110 million in revenue generated in the prior corresponding period (PCP). This came off the back of $192 million in sales receipts, also significantly higher on a PCP basis.

Management said that this performance was driven by 'sustained demand for Lynas NdPr products and strong market pricing, as end users and governments around the world continue to recognise the need for a diversified supply of responsible rare earth materials.'

NdPr, for reference, stands for NEODYMIUM and praseodymium and is an essential component for many everyday electronic devices, from smart phones to laptops.

This all translated into a strong uptick in Lynas’ average selling price – which is now almost double what it was a year ago. Indeed, Lynas has recorded solid incremental growth in its average sales prices across the last five quarters, from $20.2 per kilogram in the fourth quarter of fiscal 2020 to $39.1 per kilogram in the latest quarter.

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Cash levels rise

From a cash perspective, Lynas continues to build a war chest, reporting a cash balance of $680.8 million at the close of the June quarter.

Elsewhere, while revenue was up and demand sustained, from an operational perspective, Lynas produced less this quarter than it did during the same time last year, as the company grapples with the operational hurdles caused by the covid pandemic.

To that end, the company reported total REO production of 3,778 tonnes during the quarter, made up of 1,393 tonnes of NdPr production. While overall production was down on a PCP basis, NdPr production actually came in higher.

This upped production seems to have come at a good time, with the average NdPr prices in China hitting US$69.9 per kilogram in the June quarter.

According to management: 'Demand for catalyst from the automotive and the fluid catalytic cracking (FCC) sectors is back to pre-COVID levels, which we see continuing in the near future.'

'However, we remain alert to the effect the pandemic can have on end product demand, logistics and industrial supplies.'