Pretty good report, not one to move the needle much but the quarter paid down more debt and continued to build the balance sheet. The theme that seemed to define this report (and call) was the level of maintenance on the plant and the execution of the NEXT program...
Amanda did a good job of explaining the decrease in revenue, it appears to be a perfect storm of RE prices, production delays and an accounting anomaly (due to Easter falling at the end of the month)... Also a problem with the main water supply in Kuantan cost a few days so IMO Lynas fared pretty well for the quarter...
Amanda does an excellent job of explaining marketing in the RE business. One of the things I picked up was the delicate dilemma of increasing Nd/Pr production while also increasing the La/Ce market. If Lynas were to increase Nd/Pr volume without planning where to place the resulting increase of Ce/La it could have a significant effect on the market....
There was a mention of an "electric torpedo", an idea presented to Amanda at a show in Japan... On the call, Amanda quickly promised that Lynas was not pursuing that particular technology...
One of the questions asked of Amanda pertained to the discovery of RE's off the coast of Japan. Of course the technology is a long way off but Amanda put a positive spin on it by suggesting that this kind of publicity brings RE's into the conversation and potential customers see this as an additional supply of RE's...
All in all another good report if you take the time to understand it. On the surface the revenue decrease seems disappointing but there are mitigating circumstances that explain the decrease. The good news is that demand is increasing and the product is sold... Next quarter has one additional day in the period, nice to get a head start I guess...
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