Investment Matters

Company news: Lynas and Aurelia

Australian Equities Portfolio

Lynas (positive impact) has announced that its largest lender JARE (a special purpose company established by Japan Oil, Gas and Metals National Corporation and Sojitz Corporation) will defer further interest payments of US$11.5m until October 2021, with no penalty or additional interest.

This comes after the lender reaffirmed its support of the company in June of last year by only seeking minimal repayments until December 2024.

We see the flexible terms as an affirmation of the strategic importance of Lynas’ assets – not only to the United States but other countries that require rare earth deposits for manufacturing such as Japan.

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Aurelia Metals (positive impact) provided an update to exploration at one of its “extension sites” called Federation, a site that has only recently been evaluated as an option for future growth. Aurelia already has a large amount of infrastructure already built or planned in the Cobar region, therefore adding good deposits adds strong profits.

Drill results were promising, exhibiting very high gold grades the stock was up 8% (although we note the stock is always volatile). Discovery of high-grade gold or silver deposits can materially boost profits that are made – and is part of the upside we see in AMI.

Geotechnically the find is consistent with “structure” of similar finds along the 80km strike zone that AMI dominates, with the prospectivity of this area a key part of our investment thesis.