Lynas Corporation Failed Financially?

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SMSL press statement on the recent attempt by Lynas to raise funds through rights issue and emplacement for their continued operation.

In its first quarterly report 2014, (note 1) Lynas has a closing cash balance of AUD$23.4m as at 31 March 2014. Their next quarter will require AUD$48.172m to operate as tabled in its quarterly cash flow report (note 2). Under such circumstances the company is in danger of defaulting on their commitments to various parties especially the community in which it operates. We hereby call upon the Government of Malaysia to scrutinize the financial capability of Lynas in meeting its obligations and not to issue the Permanent Operating License (POL) when it falls due in early September.

Under the recommendations made by IAEA report, Lynas is required to identify the site for the PDF before the TOL is issued. But with the tacit approval by the regulatory authority AELB, it was only required to provide a conceptual plan of the PDF. However under the terms reached between Lynas Malaysia and the Government, Lynas is required to ship out all its recycled products made from its three streams of solid wastes. Lynas has made no provision for such possible expenses. Lynas is also required to deposit USD $10m each year with the regulatory authority AELB as deposits for the purpose of disposal of the solid wastes should it failed to utilize them for commercial purposes. Given its size which is 10 times more than ARE, the amount deposited by Lynas is immensely insufficient in the event of its foreclosure.

We are gravely concerned for the scenarios where should Lynas Corporation failed financially, the toxic legacy the Kuantan and greater Kuantan communities will inherit for all future generations will be a burden that will last for centuries! It is definitely not an unfounded or baseless concern as Soo Jin Hou’s research report showed the future rare earth market will see much more challenging months ahead (see report attached).

We would also like to call upon the Lynas Monitoring Committee set up under the recommendation of Parliamentary Select Committee to take into consideration this important aspect and be more circumspect in its recommendation to the MOSTI minister before the decision on the issuance of POL is made.

For further information please contact

SMSL Hotline 012 982 3302

Tan Bun Teet 017 973 0576

Note: (1)

(https://www.lynascorp.com/Quarterly%20Reports/2014/Q1%202014%20Quarterly%20Report_final%201324839.pdf)

Note (2)

(http://www.asx.com.au/asxpdf/20140430/pdf/42pbgdm9s1vfj7.pdf)

Soo Jin Hou’s research report

Thank You Very Much.

“Save Malaysia, Stop Lynas !”