Lynas widens first-half loss

Miner mulling additional funding to boost liquidity, shares hit five-year low.

Lynas Corporation (LYC) has widened its first-half loss as the rare earths miner's management mulls the need for and structure of additional funding in the year ahead to boost its liquidity.

Investors responded poorly to the news. At 10.55am (AEDT) Lynas shares were 11.02% lower at 26.25c, against a completely flat benchmark index.

In earlier trade, Lynas shares dropped as low as 24.5c, their lowest point since April 30, 2009 when Lynas traded at 22.125c.

In six months to December 31, the rare earths mining company posted a net loss of $59.29 million, a slight widening of the $56.58m loss posted in the previous corresponding period.

In the period Lynas recorded revenue of $14.6m, after posting nil revenue in the previous corresponding period, and only $900,000 in the previous full year.

Net financial expenses were $7.5m, a 32% increase on the $5.7m for first half of the previous year.

Costs associated with ramp-up to phase one of the Lynas Advanced Materials Plant (LAMP) in Malaysia in January 2013 weighed on the group's result with non-cash depreciation and amortisation charges in the half year rising by $8.5m, while employee costs grew by $2.3 million as a result of extra staffing needed for the increased production capacity.

Lynas said given the principal repayments due on the group's debt facilities, as well as the forecast production ramp up, it expects to have to source additional funding over the next 12 months to maintain appropriate liquidity headroom.

It will look to source this funding through a combination of either additional equity, additional debt or some refinancing or restructure of the group’s existing debt facilities.

Lynas said directors and management have assessed the alternatives and are in discussions with financial industry participants.

The group says, if additional funding is required, it is confident it will be obtained in a timely manner.

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