Lynas Rare Earths: 4Q26 – Apatite Appetite

Research evidence excerpt

Lynas Rare Earths: 4Q26 – Apatite Appetite

atite-bearing ore. Our working

assumption is that variability in feed, including apatite, to the flotation circuit is impacting

performance, increasing acid-neutralising (alkaline) gangue in the concentrate and reducing

Earnings Changes: We have updated for

downstream cracking efficiency. Management is addressing this through improved ore

Q4FY26 actuals. We have increased growth

characterisation, tighter ore segregation and blend control, and continued optimisation of the

capex in the medium term for Malaysian HRE

flotation, cracking and leaching circuits to maintain throughput. We view the issue as transient

expansion and Thorium extraction.

rather than structural.

Capex increases. We forecast A$707m (from A$496m) of growth capex over the next five Figure 1 - 2HFY26 Cash Flow Waterfall

years (Figure 15), reflecting: 1) a 63% increase in the estimated cost of the expanded HRE

separation facility to ~A$290m, driven by additional equipment required to meet customer-

specific product purity and physical-characteristic specifications, higher ex-China equipment

procurement costs and broader cost escalation; and 2) A$111m of forecast expenditure on

thorium extraction and industrial residue management, consistent with the operating licence

requirement to allocate 1% of gross sales to R&D and commercially extract thorium from Water

Leach Purification residue by Mar-31. We also see upside risk to medium-term capex from

potential modifications at Mt Weld as feed transitions from saprolite to carbonatite ore.

.

Reiterate BUY, PT AUD20.50 (from $22). While the impact of ore transition at Mt Weld was Source: Company Reports, Jefferies

unforeseen, we remain convinced that LYC is a geopolitically significant entity with increasing