Japanese shore up cash-strapped rare earths miner Lynas

By Sonali Paul

MELBOURNE, March 13 (Reuters) - Australian rare earths miner Lynas Corp warned on Friday it was struggling to repay its debt but was confident its Japanese backers would keep the company afloat after granting it an extension of up to 15 months on some repayments.

Lynas, one of only two rare earths producers outside China, has struggled to manage its debt load amid delays in getting its Malaysian plant up to full tilt, forcing it to raise A$83 million ($64 million) through a share sale and to renegotiate repayments with Japan Oil, Gas and Metals National Corp (JOGMEC) and Sojitz Corp over the past six months.

Chief Executive Amanda Lacaze, appointed just under a year ago, has made progress in improving output from the plant while lining up new customers for its rare earths products used in everything from smartphones to cars.

"That's not just my own opinion. Our finance partners see that as well," Lacaze told Reuters in an interview by phone on Friday after the company released its half-year results.

"The reason why they're giving us more runway is because they actually see that we're doing the right things, doing them in the right order and will create the right results."

With the extension on the Japanese facility, Lynas will now have to repay a hefty $135 million in June 2016, after winning relief on two $15 million payments that were due in March and June this year.

In all, Lynas owes $205 million to the Japanese and $225 million in convertible bonds.

Lynas said it expects it will need to extend the final repayment dates or refinance its facility with Sojitz and renegotiate terms of its convertible bonds with hedge fund Mount Kellett in order to meet payments.

"The ability of the group to pay its operating expenses and the principal and interest payments due on its debt facilities over the next 12 months will depend on a variety of factors, only some of which are within the control of the group," the company's auditors EY warned in its half-year accounts.

Lynas reported a net loss of A$103.5 million for the six months to December 2014, nearly double the loss a year earlier, hit by higher costs, weaker rare earths prices, and a weaker Australian dollar.

However, revenue more than quadrupled to A$65 million as it ramped up volumes.

Its shares sank 6 percent on Friday to A$0.048, not far from a record low hit in December. ($1 = 1.3028 Australian dollars) (Editing by Muralikumar Anantharaman)