Lynas Rare Earths Limited (LYC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm Kathleen Conlon, Chairman of Lynas Rare Earths' Board. I'm pleased to welcome you to this Annual General Meeting of the company. I'd like to begin by acknowledging the traditional owners of the land on which we meet today, the Gadigal people of the Eora Nation and the traditional owners of the lands in which we work, live and meet in the Eastern Goldfields of Western Australia. We pay our respects to elders past and present and extend those -- that respect to any Aboriginal or Torres Strait Islander people attending the meeting today. It's wonderful to have all of our directors present in the room today, and we're delighted that some of our international and interstate shareholders have been able to travel to the AGM for the first time in 2 years. I'd like to extend a warm welcome to all of our shareholders joining us today, both in person and online, and this is a hybrid Board meeting. Ladies and gentlemen, today's AGM is being filmed and is being live streamed via the Internet. Details are available on the Lynas website. When we come to the Q&A sections of the AGM, we will take written and audio questions from shareholders joining online as well as questions from shareholders in the room. Today, online attendees can submit questions via the Lumi platform at any time. Voting today will be conducted by way of a poll on all items of business. Online voting will shortly open for all resolutions. At that time, if you're eligible to vote, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. You do not need to hit a submit or enter button as the vote is automatically recorded. However, you have the ability to change your vote until the time that I declare the voting is closed. I now declare voting open on all items of business. The voting tab will soon appear, and I will provide notice before I move to close voting at the end of this meeting. For information on how to submit a question or vote please refer to the Lumi platform user guide on our website or in the documents tab of the Lumi webcast platform. I would now like to introduce my fellow directors. Joining me here today is our Chief Executive Officer and Managing Director, Amanda Lacaze; and nonexecutive directors, Philippe Etienne, Vanessa Guthrie, John Humphrey and Grant Murdoch. We are also pleased to be joined by our -- by Sarah Leonard, General Counsel and Company Secretary. Our audit firm, Ernst & Young, is represented by Gavin Buckingham, the partner who's joined the meeting online. I understand that all shareholders present have registered with our share registry, Boardroom, before the meeting. The Notice of Meeting was dispatched to shareholders on the 12th of October 2022, and accordingly, this meeting is deemed to have been properly convened. We have a quorum of more than 2 shareholders; and accordingly, this meeting is able to transact the formal business as set out in the Notice of Meeting. Before we begin with the formal business of the meeting, I will deliver a short address, after which Amanda Lacaze, our CEO and Managing Director, will present. We will then table the FY '22 financial statements. At that point, we will pause for questions on Amanda's presentation and financial statements. After questions, we will continue with the formal business of the meeting. There will be an opportunity for shareholders to ask questions on specific resolutions after each resolution has been presented. As your Chairman, I'm very pleased to provide an overview of the 2022 financial year, which was an excellent year for shareholders. Importantly, during the year, the company delivered a strong financial performance while also making significant progress on our growth plans. As an ethical, environmentally responsible rare earths producer with capability and customer relationships that we've built over the past decade, Lynas is well positioned to benefit from the robust rare earths market during the year. As a result of this, Lynas achieved record sales revenue of $920 million and a record net profit after tax of $540.8 million. FY '22 production was affected by the COVID-19 pandemic, including isolation requirements for team members and pandemic-related shipping and logistics delays. Water supply disruptions in Malaysia also presented challenges during the year. Our team worked hard to develop new solutions to overcome these challenges, and it's a credit to the entire Lynas team that an 8% year-on-year increase in NdPr production was achieved. Rare earths market prices and demand for NdFeB magnets were robust during the 2022 year. The recognition of Lynas as the leading supplier in the rare earths materials meant that we experienced strong demand for NdPr product family and mixed Heavy Rare Earths compound known as SEG. And this was a contributor to our excellent results. Continued progress was made on the company's Lynas 2025 growth plan to increase capacity and diversify the company's industrial footprint, including full approvals for the Kalgoorlie Rare Earths Processing Facility and construction underway. Amanda will provide an update on the construction in the CEO presentation. Plans for Lynas' expansion to the United States also progressed; and in June 2022, Lynas was awarded a follow-on contract in the U.S. Department of Defense for the construction of a commercial U.S. Heavy Rare Earths separation facility. The facility is planned to be co-located with Lynas' planned Light Rare Earths separation facility to be partially funded by the DoD. As the world seeks to transition to cleaner energy sources, demand for rare earths materials for electric vehicles and wind energy has accelerated. In keeping with our objective of growing with the market, Lynas is making further investments to increase capacity at each stage of our operations. This includes the announcement in August 2022 of an approximately $500 million capacity expansion project at the Mt Weld mine and concentration plant with the aim of accelerating feedstock production capacity as well as implementing sustainability and circular economy initiatives. Strong market prices and demand for Lynas' project further strengthened our balance sheet during the year, and the closing cash was $965.5 million (sic) [ $965.6 million ]. I'm sure many long-term shareholders are equally proud as I am to see Lynas achieve this excellent cash position. This provides a strong platform for our growth projects, including the Mt Weld expansion plan. Our shareholders recognize the unique position that Lynas occupies in the global rare earths market and the importance of rare earths material to future-facing industries, including technologies required for the energy transition. The Board is acutely aware that we operate in a highly competitive market and that the specialized skills of our team are in high demand in the rare earths and other minerals processing industries. From a remuneration perspective, the Board is focused on ensuring that the overall remuneration continues to reflect balanced and fair outcomes in the current market. During the year, talent acquisition and retention strategies were reviewed, along with the line of STI and LTI plans to ensure that they remain comparable with peer group companies. The Board has a continuous succession planning process, and it's the Board's intention to appoint the further 1 or 2 directors in the coming year. Lynas remains focused on meeting customer, community and investor needs for ethically and responsibly produced rare earths. The company continues to develop initiatives to enhance Lynas' climate change resilience in environmental, social and governance performance and reporting. And it's pleasing to see that these continued improvements were recognized by the market in FY '22. The accelerated demand for rare earths material, combined with Lynas' unique market position and progress on Lynas' 2025 growth plans underpinned the significant uplift in market capitalization during the year. This is an exciting growth business, and the Board remains focused on creating long-term value for the shareholders. So on the behalf of the Board, I'd like to take this opportunity to thank Amanda Lacaze, her executive team and all Lynas employees for their continued hard work and effective execution of the company's growth plans. The Board would also like to thank our shareholders for your ongoing support of the business. It's very pleasing for Lynas to realize the benefits of over a decade of hard work as the rare earths market strengthened this year. I would now like to invite Amanda Lacaze to address the meeting.

Thank you, Kathleen. Good morning, everybody. It's so nice once a year to see you all in person. Well, once in 3 years, it seems, actually, but isn't it great to all be back together again? And what a great year? I mean we can take just a moment to reflect on that and really enjoy it, I think. I also want to take a moment just to remember some people who have left us this year. Many of you who have been shareholders with us for a very long time would have met Mike Vaisey many years ago. Mike was employee #1 of Lynas, and I think he first started with Lynas in about 2001. He spent time here in Sydney planning and designing the plant in Kuantan. And then he moved up to Kuantan with his young family for several years. When they move back to Perth, he actually continued to fly in, fly out. He stayed with us until we reached nameplate capacity in 2017. And then after giving nearly 20 years of his life to Lynas, decided it was time to go home and spend some time with his wife and teenagers. Mike was really a fabulous guy. He was -- as said, the vision for Lynas, a lot of it came out of Mike's head. He was drop dead good looking, too, which I know I'm not supposed to say, but it was really nice in management team meetings to be able to look at him. Unfortunately, after a relatively short illness, Mike, passed in May this year. And it was a matter of great sadness for all of us in the business who knew Mike so well. And I just wanted to recognize his contribution to where we are today. It's a pity he's not here to hear that recognition directly. We did tell him that previously. But I felt that, as said, many of you have been on this long journey with us and would have met Mike on more than one occasion. And so I just wanted to share that with you and say vale to Mike. So as I said, it's nice at the end of the year to be able to take a moment to celebrate the year that was. But of course, to stand still is to go backwards. So today, I'm going to spend a lot more time talking about where we are going rather than where we've been. But first, just to remind you of our business. [Presentation]

We certainly were helped by price during the year, which strengthened on the back of increased demand. I often say that in markets there is always an inflection point in terms of demand. It's usually only really visible in the rear-vision mirror, but we certainly saw a significant inflection in demand for materials, interestingly enough, sort of really in 2021, right in the midst of the pandemic. I think that the really exciting thing for me is finishing the year with nearly $1 billion in the bank and having had some years where we had -- I should have worked this out. But anyway, I was going to say 1,000th of that. But anyway, maybe $10 million in the bank. It was certainly very satisfying. And what that means is that we have the opportunity, you have all seen this. We have the opportunity to invest, sorry, to invest in the future. So when we have a look at this and we see the $186.3 million in property, plant and equipment last year, this is about setting our business up to continue to be successful into the future. And we'll talk -- I'll talk a little more about sort of increased demand as we go forward. But certainly for us, it is essential that we are able to grow with the market, and that means continuing investment. One of the things that many of you, who may have gone to other AGMs as well, will have heard as most famous new 3-letter acronym -- at 1 stage, I worked for Telstra. When you arrived, you actually got given a dictionary with 3-letter acronyms. So ESG, it's very fashionable to say, but I'm not sure that everybody understands the richness of the areas that you need to look at within your ESG framework. There are really so many different facets. And in some ways, people like to make things complex. But we think that so long as we understand and live the values that we have set in our business that we will actually deliver to market and stakeholder expectations on ESG. So S for safety. So that is our first and core value in our business. And we all care that the people who work in our business go home safely every time they have been to work. Achievement, right, ensuring that we do achieve the outcomes that we target is really important, and that allows -- that actually sits within the governance piece of thinking about ESG, right? The job of my colleagues on the Board, the nonexecutive directors, is just a little bit easier when the business is performing than when it's not. Is that right? Yes. And -- but it also means that we're able to reinvest in the business, reinvest in our processes to improve our performance on each of environment, safety and sustainability and governance. Expertise, continuing to get better at what we do. That expertise underpins our ability to implement new sustainability initiatives within our business. I mean sustainability is absolutely a core practice. I always get a little bit cranky when I hear people sort of talk about businesses as if they don't care about the environment. The business is the sum total of the people who work in the business. And guess what? The people who work in Lynas care about climate change. They care about whether we are minimizing the disturbance of our local environments. And so therefore, sustainability is one of our core, absolute core values. And under all of that, we really just have this belief that if you do the right thing, if we are compliant with regulation, if we continue to innovate to do what we do better, then ultimately, that will deliver the best outcomes for our business and our stakeholders. What it means is the people who work for us are happier. It means the communities in which we operate are happier. It means our regulators are satisfied. And it means that when every now and then we might have some anti-Lynas activists, for whatever reason, attack us, our operations are always defensible. So there are a number of areas where we are required to report in this -- particularly this page, really recognized as some of those. Operating safely through the COVID-19 pandemic, we were really very proud of the fact that we didn't have workplace transmission, notwithstanding sort of particularly in Malaysia, a lot of infection surrounding that. We recognize not just our workers at Lynas but workers in the mining industry in general, who frankly kept Australia going during that time. And some of them made quite significant sacrifices. One of the women who's a truck driver on our site actually chose to stay in WA for 12 months and not see her family in Victoria other than on video because this was important work. And also, if she went back to Victoria, she would not be able to come back to work. She would not have a job. And that was -- that's not isolated. It just happens to be one that I actually had a conversation directly with shares about this. So really, the commitment of our people through that time and the fact that we've managed to keep our workforce safe is incredibly important. Increasing gender diversity, well, of course, you can see it evident in our Board. There's not too many companies. And isn't it grateful that, in 2022, it's still remarkable that there's a company with a female Chair and a female CEO? I mean, goodness me, how many people think it's remarkable to have a male chair and a male CEO? Not many. So -- but it is great, and Kathleen and I had really a terrific time not long ago when the American ambassador, Caroline Kennedy, came out to -- she spent a full day with us. And so we had -- Kathleen and me, and we had Ambassador Kennedy and consul general from Perth. We were all women. And we're like go girls. Anyway, we continue to focus on really growing the number of women within our business, but we are focused on all aspects of diversity because the way that we get the best outcomes is by having more diverse inputs. You get more richer conversations and more novel solutions. We are very focused on enhancing our climate change resilience. There is no one in our company who is happy that we still burn diesel for power at Mt Weld, and we have significant plans to be able to transition from that. But there are a number of other -- we will start with energy, and then we will continue into other areas of our business to ensure that we continue to improve and in particular, reduce our greenhouse gas emissions. And then I'm going to come back and talk a little bit more about the Golden Gecko Award, which is a little bit exciting in WA. So we're lucky in a world where economies are uncertain right now, we have the great good fortune of operating in a growth industry and an industry where, today, frankly, we could tell most of what we produce, certainly the NdPr, we could probably sell that twice over. And demand continues to grow and is forecast to continue to grow over the next at least 20 years, if not, more. To put that in perspective for people here, 10 million hybrid vehicles -- so world market, 80 million or 90 million cars, which are actually produced every year. If 10 million of those move from being ICE, internal combustion engines, to hybrids, then that's an extra 5,000 tonnes a year of NdPr, which is required, which is almost Lynas' current production. We sit around about 6,000, 6,500 with all of the challenges that we had with the pandemic. If those 10 million cars actually are shifted from being ICE vehicles to being battery electric vehicles, then it's 7,000 tonnes of NdPr every year, which is our current nameplate capacity. So those are not demanding numbers in terms of transition if you think about it, 80 million or 90 million vehicles a year, 10 million either as hybrids or as battery electric vehicles. This year, it looks like we will probably have that many sold just in Europe alone. And then the other area is within the really sort of big growth engine for us, is wind energy. There's 3 kilotonnes, 3,000 tonnes of NdPr oxide for every 10 gigawatts of capacity. And you can see on this sort of the capacity, which has been added over the past couple of years, which, once again, if you do the arithmetic, makes for a very exciting business as we move forward. So industry forecasts vary. The most conservative says the market will double by 2030. The most outrageous talks about maybe 5 or 6x by 2030. So we at Lynas need to grow with the market or we will lose relevance. So we have a plan to develop our business for an exciting future. You all's have heard Kathleen reference Lynas 2025. Of course, we put that plan together in 2019. At the time, we thought we'd grow by 150% by 2025, and that would be enough. As it turns out, it's that old statement, necessary but not sufficient. And so we now have an ambition to grow more and to grow faster. And I'll talk about that a little more. It means that we actually have to add capacity at every stage of our processing, starting from our wonderful resource at Mt Weld; completing our rare earths processing facility in Kalgoorlie; continuing to enhance and develop and increase throughput in our Lynas Malaysia; and of course, as Kathleen talked about, the proposed plant in the U.S. So these ambitious growth projects are already underway. But I haven't seen any of you since we announced the $500 million upgrade at Mt Weld. It does seem to me a little problematic that everything comes in $500 million chunks, but nonetheless, I think that was coincidental. But making the most of our precious Mt Weld resource is really important. And in the mining industry, grade is king. No matter how much you might like to try to promulgate alternate sort of strategies, grade truly is king. And I guess I really appreciate this more than I have ever done as we've been looking at this expansion and the need for us to grow. And I look at some of the other projects. And I'm -- sometimes wonder, well, why haven't they been able to come to market? And a lot of those have sort of geology that looks like other minerals that might be spread out over maybe an 8-kilometer seam or something like that and has to be mined all the way along. Because Mt Weld is a volcano core, it's like we've got a jar in the middle of the earth, and someone's thrown goodies into it, right? And what we're doing now is we're just actually taking those goodies out. But we -- and this is why Mt Weld is -- really underpins the value for everything that we do in Lynas. It is about grade. It is about the profile of the minerals within that deposit. And as we've continued to explore, we just have more confidence in the ability for the Mt Weld resource to continue to feed our business for decades to come. But the $500 million expansion project, which is very exciting, we're targeting concentrate feedstock of 12,000 tonnes per annum of NdPr products in 2024. So that's a year earlier than the original 2025. I'm sure you've worked that out, '24 is before '25, but anyway, just in case. But it's -- and it's also what we're looking to have is 12,000 tonnes, not 10,500 tonnes. We're also implementing at present a 2-year exploration program and significant new infrastructure at Mt Weld, which will enhance our sustainability initiatives. We have the project team in place. We've taken one of our best and brightest and put him in as the lead. We have many of our long lead time items and early procurement underway. And we have the support of our Japanese partners. JOGMEC has some really world-leading geologists who are working alongside our team as we undertake further exploration into the carbonatite. One of the things, though, if you're really going to live sustainability is even though Mt Weld has not got much around it -- even now our indigenous inhabitants called it passing through territory. Even though it appears that land might be cheap, if you really live and believe in sort of principles of sustainability, then we need to think about how do we continue to develop in a way that minimizes disturbance of the surrounding environment. And so our team, not necessarily always enthusiastically because some of these things could have been done a bit more easily if we just said, well, we'll just get a bit more land over there, has designed the new production activity so that they will fit within the land space that we have already disturbed. And what that means, I think, is that it's visible to everybody on our team that we actually practice what we preach. We do have a proposal in front of the EPA to increase our disturbance envelope, but that will be for photovoltaic array, so solar panels, wind turbines and new water management. So our sustainability assets are the things which are going to have to move, the things which are going to increase, sort of improve our infrastructure are the things which will be outside of the current disturbance envelope. Then, of course, everybody wants to know about Kalgoorlie, right? And Kalgoorlie is exciting. And every time I visit, it looks different. It's just -- it's like really cool to see it go from just being sort of scrubbed to where we are today. And to help you to visualize that, we actually have a time lapse, which actually shows the progress of this over the past year. [Presentation]

Amazing really when you think about it. And the project team there has really done an outstanding job. One of the reasons why we chose Kalgoorlie was it gave us an opportunity to be really part of a local community. It also gave us the opportunity to look at having a residential workforce. So just in terms of both of those things, this slide really reflects sort of our ability to place business locally in the community and also within Western Australia. That's part of actually ensuring that our prosperity is shared with our communities. We see this as an important part of our duty within the communities we operate. And we now have our operations team recruited, and 100% of them are actually local Kalgoorlie residents, which has certainly been recognized in Kalgoorlie. Of course, Malaysia, we continue to develop our operations there. We are working on programs to increase capacity. The first, however, and most important step is to ensure that we're able to receive and then process the mixed rare earth carbonate, which will be coming out of the Kalgoorlie facility, which is a different product from the concentrate, which we process today. So the team is very busy on completing that at present. We will continue to invest in our solvent extraction and product finishing assets. The plant's 10 years old now and ensuring that we keep it operating efficiently and safely is an important part of our program going forward. We are looking, and I think most of you would know about our water woes. We operate on the wettest continent on Earth and the driest and water's a challenge in both locations. So we're doing a lot of work on water recycling techniques. One of the features of the Mt Weld expansion is taking our water recycling up over 90%. We are looking at trying to develop a flow sheet in Malaysia, which will be 100% water recycling option. So we don't have to put announcements out like we had to in September again, but it will take time. It's tricky chemistry apart from anything else. And then we will actually have to implement it, but we are doing this work; once again, contributes significantly to our sustainability program. In the U.S., Kathleen mentioned this. We have a very committed and supportive relationship with the U.S. government. The follow-on contract has been awarded. We have identified a preferred site, which is on the Gulf Coast of Texas. When I was meeting with one American politician, his -- offsite, he said, "Oh, we could name it the critical coast." I'm like, yes, maybe you should stick to policy and leave advertising to -- no. No, I know critical coast was okay. And we are very engaged with the locals there. And just a few happy snaps. Please, they're not selfies. But as I said, Kathleen and I spent the full day with the U.S. ambassador. And then really, it is important in any business to be engaged at all levels. So we have the team with John Bowler, the local mayor. We have a couple of our team. That's Rick Wilson, the federal member for Kalgoorlie. And then we have sort of the final, which we've got Bill Johnston, who's state. We've got Madeleine King, who's federal, and we had a couple of other state politicians in that instance as well. It's great that they're interested enough to make the commitment on time to come and see us. I mean as we think about these things and how can government affect our ability to be successful, being informed on our business is a first and important step. Today, we've got over 1,000 employees and contractors globally with this strong commitment to gender and cultural diversity. We have our ongoing engagement with our communities. We've launched our Local Giving Programme in WA. In terms of environment, I've covered a little of that, our energy transition initiatives, water recycling programs and mine site rehab. But I do want to spend a moment talking about our tailings because our tailings management was named finalist in the 2022 Golden Gecko Awards in WA. And the reason why we are so proud of this is because it truly was innovative work from our team to solve problems where you couldn't just pick up a textbook and learn how somebody else had done it. So back in 2014, if you look at the photo on the left-hand side here, our tailings wouldn't settle. And this is a reflection of the fact that our material is very fine grade. And so we had a tailings dam, and it looked like a dam. We had ducks on it and all sorts of things. And then the team said, "Oh, Amanda, we need $8.5 million to build another tailings dam because, by the way, this 1 is going to be full in August." And I said, "Well, guess what, we don't have $8.5 million. So you better think about a different solution." And I'm just so impressed by the people in Lynas every single day. And so our people did think about a different solution. So the first piece was really to come up with some -- what we call enhanced deposition. And that started by using an agent that would help to sort of bind this and we were binding it. But then they worked out that we had a material, which was a byproduct in our process that would do that job. And so we were able to reuse something in the process. And so what that gave us was somewhat better solidification. But we still had a lot of water. But by the way, we didn't have to build the next tailings dam until 2015 when we did have $8.5 million fortunately. But once we started to get more of the one facility, we had the ability to be able to manage the way that we put our tailings into each facility. So still very fine material we managed to get it a little better with the enhanced deposition, but it still wasn't good enough. So we have this MudMaster it's called, which is a amphibious piece of machinery, where it runs across the tailings and churns it up so that what's underneath is exposed to the sun, and therefore, is able to dry out. And so today, when you look at the photo on the right, you see -- that is our tailings dam. And we had the EPA out there last week and the Chairman sort of looked at it and said, "Oh, it looks like it's just ready to be planted with crops. Well, we wouldn't [indiscernible] with that because what we'll do is that we'll dig it out the average rarest grade and the tailings sits at around about 7%. And so our objective will be, over time, to be able to process that material. But really, it's a perfect example of the success of Lynas, which is in the first instance, driven by the people in the business, not saying, well, we'll just do what everybody else has done, but we'll find our own solutions. That's the value of diversity. So we are important in the global economy. We continue to grow. We continue to offer new jobs and good jobs in each of the jurisdictions in which we operate. We look forward to the next 10 years with great enthusiasm. I've been in the job for just over 8 years. I got to tell you every day, still a challenge. Every day is still fun, at least for me, sometimes people who work for me think otherwise. But we'll take my word for it every day is fun. And I'm looking forward to the next 10 years with really a great deal of enthusiasm.

Thank you, Amanda. We will now move to questions, and I will table the financial statements of the company for the year ending 30 June 2022, consisting of the annual financial report, the director's report and the auditor's report. The annual report was dispatched with the notice of this meeting to those shareholders who requested a hard copy, and an electronic copy was sent by e-mail to shareholders with an e-mail address and made available on the ASX website and the company's website. We would now like to ask for questions on Amanda's presentation and the financial statements. A reminder that only shareholders, proxy holders and authorized representatives can ask questions. Proxy holders, please state your name and that you're a proxy holder. Shareholders joining online can ask a question by selecting the messaging tab at the top of the Lumi platform. For more information I had to ask a question, please refer to the documents tab on the website. For shareholders in the room who would like to ask a question, please form a queue behind the microphone at the front of the room. Do we have any questions?

My name is Ray Wheeler and I am the proxy voter today for the Australian Shareholders' Association. I've got a few questions. Our monitor resides in Western Australia, couldn't be here today that I'll come to ask his questions for you. With Resolution 4, are you going to ask questions...

We're going do questions for each resolution. So this is really only questions on the financial report, please.

Only on the financial report. I think, I'd go away.

Jen, do we have any questions on the financial report?

We do have a question at Kathleen that's been submitted by one of our shareholders, which is regarding a dividend. So asking -- when given the restriction in JARE has been removed on dividends, when is Lynas planning to pay a dividend?

So we were very pleased to remove the restriction to give us the opportunity to have a fulsome capital management plan. The Board will consider dividends going forward. But as Amanda laid out, we have a very large capital requirement over the next 12 months. And we think that's our best use of capital at this stage, but we will consider to continue to have that discussion as a board.

Thanks, Kathleen. We do have another online question from Mr. [ Steven Mayne ] asking do the any of the 5 main proxy advisers recommend a vote against any of today's resolutions, which of the proxy advisers are covering us. And have there been any material proxy protest votes? Will you disclose the proxy votes before the debate on each resolution, so shareholders can ask questions if there's been any protest folks and why not disclose the proxies to the ASX with the formal addresses like others now do.

Thank you for the question, Steven. I know that, that's a question you've asked at each of the AGMs. The proxy adviser reports are actually confidential reports between them and the companies that they work for. We are covered by all the proxy advisers, and we will be displaying the proxy votes prior to showing each of the resolutions. So we've got a follow-up question.

My name is Brian Davidson. I'm a shareholder. I'd like to ask a question about [indiscernible], if I may, address. Could you tell us whether you are confident that Lynas will have the Kalgoorlie plant in operation in time to satisfy the Malaysian government's licensing requirements.

Thank you. I am confident that we will manage our business so that we do not have disruption to the business. So our focus has always been and we have always said that the absolute deliverable is that this facility is operating in time for -- if the 4 conditions hold in time for that transition. And all of our timing of that project is focused on that. So this is not one of the things that is keeping me awake at night.

And what about making it on budget as well as on time.

Well, we disclosed last month, I think it was that we -- we have actually increased the scope of the project. So we've put in a new carbonate refining circuit, and we've also upsized from the original 600 tonnes to just over 750 tonnes that we'll be able to do on a monthly basis because it makes more sense to do this at the time of construction than to come back and do it later. And there has been some overrun in some of the construction costs, the equipment we all got on budget and on time. And so we disclosed about a 15% overrun on the original $500 million with about that 60% of that is about scope and the rest is about cost.

Thank you, Amanda. Finally, as a former Chairman of the company, I'd like to congratulate you and the Board on the great job, which you've done in bringing this company to the stage where it now is.

Do we have any more questions on this item?

Yes. Kathleen, we have another question, which is when the Lynas going to start manufacturing lithium batteries and magnets in Australia.

So we can't really speak to lithium batteries. We don't make lithium products. So that's not in our skin. We actually -- the magnets that get produced from our products get used in the motors which then charge the batteries. In terms of downstream processing, we have a pretty ambitious growth strategy at this point, which is in our core business, and that's our focus for the next year or so.

Bob Richardson, Clearview Retirement [indiscernible]. Amanda, thank you for a terrific year and congratulations. In the report, as mentioned of the works at the lab to change things there. And there's reference to repurposing existing equipment to expand the range of products. Are you able to talk a little bit about that range of products?

I will talk a little in the first instance, as I said, and we will provide more detail on this as we move through it. But as I said, we need to double our production basically within the period that previously, we were looking at about a 50% uplift. And that means we've got to do more at each stage. Now we will have some additional separation assets with the proposed plant in the U.S. But by far, the most cost-effective way ever to increase production is by increasing it within your existing assets. So once again, our team is working on a flow sheet, which will allow us to increase production through solvent extraction without having to make huge additional investments, I mean everything has some costs associated with it. And we will need to put in some additional calcination facilities and product finishing and make the changes to the precipitation circuit. So that's the sort of thing we're talking about is to be able to uplift the production there. Then I think the other thing as you would be aware that the lab was originally designed to produce 5 products. And today, we produce about 16. Everybody does focus on NdPr, but we've had some real success in the last year or so with water treatment products that are produced using our lanthanum and cerium, more higher purity materials in those areas in particular. And so really, what -- and we added, of course, in the separated Nd and Pr to the product suite. So we are continuously innovating in terms of our product range, and that's really what we're talking about here.

Just finally, could you comment on the higher-quality cerium that we were hearing about 1 year or 2 ago? Are we producing and selling it?

Sure. That's part of what I'm talking about with the water treatment material.

Do we have any more questions online, Jennifer?

Yes, we have another question that was submitted, which is -- as a shareholder, I'm keen to see a higher allocation of research and development investment from spent by Lynas. Could you please let me know Lynas reports on the relationship between executive remuneration and research and development.

So I'll take the second part of that question, and then I will hand the first part of the question to Amanda. So we are transparent with our LTI metrics and in the LTI metrics, we have a portion which is capacity and project based. And a lot of our research is going into our ability to grow capacity. And as Amanda also talked about, increase the product range that we have. So that is within those disclosed metrics, but I'll hand over to Amanda to talk about our R&D program.

Yes. Look, I think that you probably got the sense from what I was talking about is all about innovation, right? We're facing into this exciting growth market with new products. And if we think about the last 10 years, no one outside of China has stood up a plant like ours in the 30 years prior to that. So our team has had to invent that because the Chinese don't share their [ IPconfigure ]. And so really preserving that innovative mindset and continuing to improve. So as we think about R&D, we've got a variety of areas where we are always focused on improving right from the mine, we have research partnerships here in Australia with CSRO, with ANSTO. We've got PhD students at Murdoch and Curtin Universities, University of Adelaide, ANU. These are all working with us as we continue to explore the ore body and understand how to use it best. And then of course, in Malaysia, we have our own R&D team who's actually focused on developing things like, for example, the water treatment materials using the Cerium and -- but also on process innovation as we move through. So we have significant investment across every part of our business in both R and D. There are slightly different brains for the two of them. So we do actually do a lot of partnering to really cover the R, and we do a lot of our own internal work on then applying it, which is really the D.

[ Jeff Parsons ], shareholder and former work in the [indiscernible]. The flow sheet you showed up there or the picture of the Kalgoorlie plant -- expansion of the Mount Weld plant had an apatite leach. Can you elaborate a bit more on the appetite processing.

Not a lot. Because I think we do have to finish before everyone goes to sleep, and I couldn't send people tho sleep with it. But look, we're processing and you know this, yes, it's a bit of a dirty, basically we're processing a natural material. And as we go through the Mount Weld ore body, both its geology and its mineralogy changes. And -- so the material which we processed initially, which is from the highest grade part of the mine is CLZI ore, which is -- CZLI ore, which is both high grade and very easy to liberate the rare earths because it's a monazite, but some of the other sort of forms of material, which carry the rare earths and the Mount Weld ore body include appetite as we've gone into the carbonatite, we've got bastnaesite and parisite as well. Now each of those performs differently in the process. And so apatite compared to monazite actually, the apatite floats off earlier in the process. And because it floats earlier, it takes more of the rare earths with that. So we end up feeding the TSF instead of actually feeding the concentrator with some of that material. So this is an opportunity to act -- what we're doing is that we're actually putting in place some different steps, which will ensure that we're able to keep our recoveries on the NdPr in particular on the rare earths coming out of that apatite at the same sort of levels that we have with our monazitic material. That work?

[indiscernible] For flotation, but at least an extra step.

Yes. Any other questions?

We have 3 further questions from Mr. Steven Mayne. The first is on the financials and the annual report shows the CEO sold 1.15 million shares during the year. Could the CEO please explain why she would be [ selling ] whether intends to sell any more shares? There's also a question for the auditor and the general business question, if you'd like to.

So Amanda has -- I think Steven has an interest. Amanda has bought shares on market in previous times in her career. She has generally only sold shares for either tax purposes or investment in homes and otherwise. And so that's where that goes. And I don't think she needs to comment on that.

Oh I'm happy to. So for all of you that I know for a while, all right, life is a bit exciting in the Lacaze Morgan household right now because we are 3 days away from the wedding of the century. And certainly, there's been a few of these sort of events crystallized. But I would actually say, I sold 0 shares for the first 5 years that I was in this job, I covered all of the taxation liabilities actually out of my own cash flow during that period of time. As our valuation has increased, the taxation liabilities have likewise increased. I'm told it's the first order problem. And so that no longer became feasible. But as well as that, we are building a house, which has been exciting and I go back to we're having the wedding of the century. So yes, like I said, I'm not flying away not thinking about Kalgoorlie, but I am thinking a bit about the wedding of the century.

There's also a general business question asking the Morrison government was throwing cash at public companies in its final 12 months in an unprecedented manner, did we get access to much of this? And what sort of approach is the new Albanese government taking when it comes to providing direct assistance to critical minerals companies like Lynas.

So I think it's really interesting. I think that Western governments struggle with really good industry policy and planning -- and I go to a very few and I engage with a lot of governments and regulators. And it's sort of like they're almost offended by the fact that China has managed to develop this dominant position in the supply chain. 30 years ago, China knew they had a resource. They didn't even know how to sort of do a first step of processing much less right down to the sort of advanced manufacturing that they do today. And so their dominance in the market is the result of 30 years, where West has said, well, we're happy to be able to just access sort of cheap materials. And then all of a sudden they got this indignation that how did China be so dominant. Well, it's 30 years worth of policy and strategy well executed. I find that particularly the Australians, the U.S. and the Europeans really are struggling with the idea that if they want to be able to change these dynamics they need -- they need not to have policy ADHD. But they actually need to plan the industry policy and stick to it. No, I think that there is a great awareness in each of those jurisdictions of the importance of the pharmaceutical and critical minerals, which basically just means something which is pretty important and which we don't have a lot of today. So iron ore is actually pretty critical, but it's not on the critical minerals list because we've got plenty of it. But some of these other things which come from other jurisdictions, we sort of see and on the critical minerals -- it's bipartisan support for it. And so certainly continued support for the development of this industry we see coming forward, really, no matter who is in government. But having said that, the opening statement was the Morrison government was throwing money at business. Did you get your hands on any of it? Well, yes, of course, I said to our people, we should be at the front of the queue because at least that way, we know it will be spent wisely. And so we do have support both as part of the Kalgoorlie project and also at Mount Weld for some of the work that we're doing there. We've also had the ongoing support of the Japanese government. We -- our debt at 2.5% fixed interest rate is unmatched anywhere else in the world. And of course, we have the grant money coming out of the U.S. But even most, I'm very happy for us to be first in line. My conversations with government are that I would rather the money be spent on creating infrastructure and when we can then be successful as businesses, and particularly in Kalgoorlie, things like -- the council has done an excellent job on recycling water. We just need more people there flushing toilets because we then take that recycled water, and we reuse it 6 times in the process in Kalgoorlie. But we would have a problem if we were having to use clean water coming up the pipeline compared. So that's an example of how government has invested in a capability, which allows the industry to be successful. And we would like to see more of that rather than sort of placing a bit here and placing a bit there, but more focus on creating infrastructure and capability in which many of us can be successful.

Chairman, the final question for this section relates to the financial report, and it's a question for the auditor. The accounts show we have audited net assets of $1.65 billion, yet our market capitalization of $7.75 billion. Are we being too aggressive in writing off investments rather than capitalizing them. Where does the auditor draw the line between expensing cash outflows and capitalizing them? Could the Chair also comment?

Do we have the auditor online?

I believe so. Gavin?

I've come off mute, Chair. Hopefully, you can...

I can. Yes.

That's good. So the answer is the cost and expenditures capitalized or expensed in accordance with the requirements of the accounting standards. So it's each year where all of the expenditure in that particular area assessed as to whether it meets the requirements to be capitalized or the requirements to be expensed, and that is how they're reflected in the financial statements. So we're comfortable with the accounting and how the expenditure each year is being reflected.

As are we, thank you. So if that brings us to the end of the questions, we will proceed with the formal business of the meeting. Attendees in the room will have received one of the following cards upon registration. Orange, voting shareholder; green, nonvoting shareholder; and blue, for visitors. This year, we will again use the procedure by which each resolution will be discussed, and then each resolution will be voted on by way of a poll. Details of the proxies for each resolution will be shown on the screen prior to each resolution being put to the meeting. As stated on the proxy form, the Chairman will vote undirected proxies in favor of each resolution. Each shareholder who is present and in person and who is eligible to vote at today's meeting will have received the orange colored voting card from the registration desk. At the conclusion of the meeting, representatives of boardroom will collect the completed voting cards from each shareholder. The notice of meeting having been duly distributed to all shareholders will be taken as read. After each resolution is tabled, I will ask for questions from the shareholders online and the shareholders in the room. Resolution 1 seeks the approval of the 2022 remuneration report, which is set out in the company's annual report. The remuneration report sets out specific details of the company's remuneration framework during the year ended 30 June 2022. Proxies received for the Resolution 1 concerning the remuneration report are shown on the screen. Are there any questions on this resolution? In the room? Jen, online?

No questions online at this stage.

Thank you. I will now put Resolution 1 to the meeting for voting by way of a poll. The text of the Resolution 1 is shown on the screen. As the next resolution concerns my election, I will hand over to John Humphrey forward.

Thanks, Kathleen. Resolution 2 relates to the proposed reelection of Kathleen Conlon as a Director. Ladies and gentlemen, the Board greatly values Kathleen's experience and contribution as a director and the Chairman. And so the Board, with Kathleen abstaining, unanimously supports her reelection to the Board. Details of Kathleen's background and experience are set out in the explanatory memorandum and on the screen. The proxies for this resolution are also shown on the screen. I would now like to invite Kathleen to briefly address the meeting.

Thank you very much, John. As we said earlier, I joined the Board in 2011, and the company has gone through a massive growth and transformation during that time. I was fortunate enough to be asked to be Chairman 2 years ago, and it's been a pretty exciting 2 years with COVID significant changes, but we've delivered a lot on our growth promise, and I look forward to having the opportunity to continue to serve you as Chairman over the next few years as we continue to grow the company and deliver shareholder value.

Thanks, Kathleen. Are there any questions on this resolution? Jen?

Yes, there's 2 questions online. The first is, if reelected today, will the Chair commit to this being the final 3-year term given that she joined in 2011. Also does Kathleen believes the next chair is currently serving on the Board. And secondly, with a market capitalization of $7.55 billion, that gives us time to expand the number of independent directors from 5 to at least 7 in order to diversify our skills metrics. What's the current [indiscernible] under the constitution? And are there any special regulatory or government requirements around who can serve on the Lynas board given its critical role it plays in supply chains and national security.

I might ask Kathleen to answer the first part of that -- answer the first part of that question.

So yes, I absolutely commit to this being the last time. I have a strong view that diversity and changeover of the refreshment of the Board is a really good outcome for shareholders.

So the second part of the question was, will we look at expanding the Board. The answer to that question is, yes, we will. The other part of it was are there any constitutional restrictions that might bear on that process? And the answer to that is, no. So we are currently considering the composition of the Board with a view to expanding it, and it would be our intention in the short to medium term to appoint another 2 directors. Jen?

There's no further questions online.

I now put Resolution 2 to the meeting for voting by way of a poll. The text of the resolution is shown on the screen. And I'll now hand back the meeting to Kathleen.

Thank you. Resolution 3 relates to the proposed grant of performance rights for the benefit of our CEO and Managing Director, Amanda Lacaze. Each performance right is a right to acquire 1 share in the company in the future. More details regarding the performance rights that are proposed to be issued, Ms. Lacaze has set out in explanatory memorandum. Proxies for this resolution are shown on the screen. Are there any questions on this resolution? Jen?

Yes, Chairman, there's 1 online question. Could the CEO summarize her past LTI grants as to whether they have vested or elapsed. Also has Amanda ever sold any ordinary shares in the company or bought any on market without relying on incentive scheme to build her equity position in the company.

So I actually answered most of that question. And in fact, there have been rights that have elapsed even this year. So it's a fairly frequent occurrence.

Are there any additional questions?

Not at this stage.

Okay. Thank you. I will now put resolution 3 to the meeting for voting by way of poll. The text of resolution 3 is shown on the screen. And I will now move to Resolution 4. Resolution 4 relates to the proposed increase to the non-executive director aggregate fee pool. This is designed to ensure that the nonexecutive director fees can be set at a level that will continue to attract and retain nonexecutive directors, manage succession planning and appoint additional directors as required. More details regarding the proposed increase to the director fee pool is set in the explanatory memorandum. Proxies for this resolution are shown on the screen. Are there any questions on this resolution?

Yes. Ray Wheeler from Australian Shareholders' Association. The proposed fee pool increase is to provide for an increase in Board size. The Board skills metrics makes no specific reference to ESG. Are ESG skills and experience going to be approved requisite for any new Board member.

I think ESG is a core skill now for every board member, and we expect that all of our Board members will demonstrate capability in this area. Are there any additional questions on this resolution?

Chairman, we have 1 online question, which is what is the history of individual NED fee increases at Lynas and what further increases are planned if this resolution is passed. Also what geographic diversities do we have with our current 5 NEDs? And are we planning to broaden to all of the incumbent directors living out of Perth or Sydney.

So the increases to the director fees have been very, very modest for a very long time because the company were short on funds, and it was not felt that the director should be getting increases. We have benchmarked where our fees were, and we were -- as with our executives, very low relative to the benchmarks. So we have increased them. The objective of increasing the fee pool is not to have a wholesale increase in fees. But actually, as we said, to expand the Board, which we've said a few times and provide for succession planning. Our current directors all reside in Australia. We have 3 in Brisbane area, Queensland, 1 in Sydney, 1 in Melbourne. And we are looking at expanding and exploring how we might expand into the international pool of directors as we continue to grow our international footprint. Are there any further questions on this resolution?

No further questions online.

So I will now put Resolution 4 to the meeting for voting by way of a poll. The text of the resolution is shown on the screen. Ladies and gentlemen, that concludes the formal business of the meeting. And if there's no other business, I declare the formal part of the meeting closed. I would now like to complete the poll process and advise that I will close the online voting system in 1 minute. Please ensure that you've cast your votes on all resolutions. For those shareholders in the room, the instructions for completing your voting cards are as follows: please write your name in the space provided at the top of the card. Secondly, if you wish to vote a number of shares in 1 manner and another shares in a different manner, clearly mark 1 only of the boxes next to each of the resolution. You may vote for or against on each resolution. Please sign the space provided at the end of the voting card. And finally, lodge the completed voting card in the ballot boxes that are available at the door or hand your card to a boardroom representative. For shareholders online, voting is now closed. The results of the poll will be announced to ASX and will be posted on the Lynas's website later today. Ladies and gentlemen, thank you again for your attendance at today's meeting and for your continued support of our company, and that concludes. Sorry, we'd do general questions in the [ front ]. Do you have a question you'd like to ask? Okay.

I apologize for that. I thought general questions would be at the end. So there are three. And one is the dividend question, which is coming up again with the likely elimination of accumulated losses, deletion of dividend restrictions under the JARE loan agreement and known capital commitments, can shareholders look forward to an initial dividend in 2023.

The Board will continue to look at shareholder dividend policy. But as I said, we have a significant capital plan that we need to fund.

So you can't commit to...

Yes. We're not going to commit to a yes or no at this stage.

Okay. Next question. ASA has been informed that Lynas does not provide financial guidance, especially now the prices are so volatile. Can shareholders be at least provided with an annual forecast and production in sales volumes, which are both reported every quarter?

So we've made a choice to not to give guidance, but we continue to look at that issue. So at this point, we will look at it, but we will not make a commitment to give additional guidance.

Okay. Next question. Timely completion of the construction of the Kalgoorlie plant is extremely important. The ASA has been advised that an update will be given at the AGM. Could you confirm that the July 2023 deadline will be met and be included in the update. And if not, the ASA should request confirmation or the plan if a delay is forecast.

I think Amanda answered that question earlier on.

Right. So will it be completed in 2023 except for your increasing tonnages and other...

So I think what Amanda said was she was confident that the plant would be operational in 2023. So this concludes today's proceedings.