LYC - Lynas Rare Earths

[nioka]

I'm not sure how appropriate that cross-promotion of Navigator resources is. I mean that was basically an advertisement for NAV on the LYC board...

You are not sure. I am sure it is cross promotion and ramping a stock that could not be compared with LYC for value. NAV is that far behind in the rare earth business compared to LYC that it is not even on my "interested" list.

 

[TabJockey]

Can anyone verify that the REE prices on the Lynas website are accurate? $70 a kilo per average weighted REE is a big rise from Q3 yet the price action has not followed what you would think would be a big rise in future profits?

Also does anyone have an estimate of total cash cost per tonne?

or even total operating costs per tonne?

Just wondering what sort of payback ratio its going to have over the next 2 or 3 years.

 

[nioka]

Can anyone verify that the REE prices on the Lynas website are accurate? $70 a kilo per average weighted REE is a big rise from Q3 yet the price action has not followed what you would think would be a big rise in future profits?

Also does anyone have an estimate of total cash cost per tonne?

or even total operating costs per tonne?

Just wondering what sort of payback ratio its going to have over the next 2 or 3 years.

Lynas website has been shown to be accurate as prices are published on different metal exchanges.

Lynas has published costs around $7 kilo. Calculations by outside sources have used costs around $9 to establish value for LYC. They also use $30 on a regular basis as a sale price. Even using the high cost and low value revenue there is still a very short pay back time.

These can easily be checked from company and broker news releases.

 

[TabJockey]

Lynas website has been shown to be accurate as prices are published on different metal exchanges.

Lynas has published costs around $7 kilo. Calculations by outside sources have used costs around $9 to establish value for LYC. They also use $30 on a regular basis as a sale price. Even using the high cost and low value revenue there is still a very short pay back time.

These can easily be checked from company and broker news releases.

Thanks Noika I searched some reports but could not find a predicted cost per kg. Lynas has contracts to sell its rare earths with a price floor but no ceiling? The basket price per kg is currently at $70 and demand is predicted to rise, so $30 feels like a conservative estimate to me.

So taking a $9 cost and a $30 price, thats $21 a kg profit on 11 000 tons in the first year: which equals a 230M profit.

With 500m shares out there thats a ball park figure of 30c earnings per share after tax. Makes $1.50 look very low.

Is there something im missing here? I am just a student.

 

[drlog]

Thanks Noika I searched some reports but could not find a predicted cost per kg. Lynas has contracts to sell its rare earths with a price floor but no ceiling? The basket price per kg is currently at $70 and demand is predicted to rise, so $30 feels like a conservative estimate to me.

So taking a $9 cost and a $30 price, thats $21 a kg profit on 11 000 tons in the first year: which equals a 230M profit.

With 500m shares out there thats a ball park figure of 30c earnings per share after tax. Makes $1.50 look very low.

Is there something im missing here? I am just a student.

I am guessing that the market has priced in some kind of risk - the company has never made a profit so something could go horribly wrong that was unforeseen. For example, one of the chemical processes could be more difficult than expected (yes, I made that up, I have no idea what could go wrong).

However, IF you are right and the profit/kg is correct and there are no problems processing the material then yes, we shareholders should make some money

 

[TabJockey]

I am guessing that the market has priced in some kind of risk - the company has never made a profit so something could go horribly wrong that was unforeseen. For example, one of the chemical processes could be more difficult than expected (yes, I made that up, I have no idea what could go wrong).

However, IF you are right and the profit/kg is correct and there are no problems processing the material then yes, we shareholders should make some money

Fantastic, also any idea when they are going to raise another 250m to start phase 2? good time to buy more.

 

[vincent191]

I am guessing that the market has priced in some kind of risk - the company has never made a profit so something could go horribly wrong that was unforeseen. For example, one of the chemical processes could be more difficult than expected (yes, I made that up, I have no idea what could go wrong).

You have guessed CORRECTLY, they are having problems in getting one of their chemical processes to deliver the expected results in early testing. I don't know the exact nature ot how serious it is. I got this from a broker report and don't ask me which broker - I cannot remember.

 

[nioka]

I am guessing that the market has priced in some kind of risk - the company has never made a profit so something could go horribly wrong that was unforeseen. For example, one of the chemical processes could be more difficult than expected (yes, I made that up, I have no idea what could go wrong).

However, IF you are right and the profit/kg is correct and there are no problems processing the material then yes, we shareholders should make some money

Take into consideration that stage two is partly sold out too. That could double the income and reduce costs also. The LYC share price has been manipulated by shorting and heavy trader activity and is in my opinion being held well below its value. I can see very little that can go wrong with the start up of the plant as it uses a proven technology and appears to have top technical staff.

 

[Magic Man]

HEY Nioka.

just wondered if u had a 12 month price target on Lynas??

Thanks

 

[oldblue]

You have guessed CORRECTLY, they are having problems in getting one of their chemical processes to deliver the expected results in early testing. I don't know the exact nature ot how serious it is. I got this from a broker report and don't ask me which broker - I cannot remember.

It would be useful if you could search your memory really hard, vincent, and point us in the direction of this report.

Any problems with their processes are likely to have a material bearing on their SP and will need to be disclosed to the market.

 

[nioka]

HEY Nioka.

just wondered if u had a 12 month price target on Lynas??

Thanks

I don't like to put price targets. I hold a share on the basis that there is plenty of room "upside". With LYC there appears to be a lot of room there.

Firstly because the step from devellopment and construction to production will give a boost to any stock.
Secondly. There is no other company within a "boars roar" of LYC when it comes to having product for sale, time wise.
Thirdly. It looks as though stage two is sold out. The Chinese restrictions are making users of rare earth outside China edgy about the future and will keep the product in demand, not only for their immediate needs but also to build up buffer stocks. Stage 3 a possibility.

The obvious big margin between costs and probable selling price means that LYC should be very profitable and multiples of todays price possible.

 

[vincent191]

It would be useful if you could search your memory really hard, vincent, and point us in the direction of this report.

Any problems with their processes are likely to have a material bearing on their SP and will need to be disclosed to the market.

Ok I will go home and dig up last week's papers & magazines. Hopefully I can find it again. I am not making up stories.

 

[drlog]

Ok I will go home and dig up last week's papers & magazines. Hopefully I can find it again. I am not making up stories.

I was also dubious when you made your earlier statement. I was just speculating about what could possibly go wrong. For example, one important question is: Are all of the elements affected by this chemical process? They may be able to extract all elements except Thulium in which case they will still be able to make a lot of money (but perhaps slightly less money). However, if it is really a case of them not being able to process ANY of the elements then this is significant.

Once again, I am making stuff up, I have no idea what I am talking about, DYOR!

 

[mattryanshares]

Well i hope you guys are right i bought 500 of these on a hunch, with no experience at all i was going to dump them a few weeks ago but everything appears positive??

 

[TabJockey]

Well i hope you guys are right i bought 500 of these on a hunch, with no experience at all i was going to dump them a few weeks ago but everything appears positive??

Mattryan thats a little bit inappropriate, everyone has thier own investment goals and financial advice is not offered on this forum, if you want someone to pick stocks for you, pay for analyst reports.

Also I dont know what price you bought in at, and no offence, but 500 shares at $1 -1.50 is a small parcel by anyones standards. Commsec brokerage alone puts you behind 4.5 - 6%! plus inflation and your looking at a 9% return just to break even.

Its fun to play around with a few shares here and there but dont try to pin it on us when the results are not what you expect

 

[mattryanshares]

Mattryan thats a little bit inappropriate, everyone has thier own investment goals and financial advice is not offered on this forum, if you want someone to pick stocks for you, pay for analyst reports.

Also I dont know what price you bought in at, and no offence, but 500 shares at $1 -1.50 is a small parcel by anyones standards. Commsec brokerage alone puts you behind 4.5 - 6%! plus inflation and your looking at a 9% return just to break even.

Its fun to play around with a few shares here and there but dont try to pin it on us when the results are not what you expect

Not looking for advice just hoping you guys are right!!

I accept full responsibility for my actions and LYC better do 9% at least then!!

 

[TabJockey]

Haha alright. All going well I agree with Noika's vague "multiples" price estimate, which would definately cover your 9%

 

[nioka]

Haha alright. All going well I agree with Noika's vague "multiples" price estimate, which would definately cover your 9%

Potential ....... multiples. Not everything will realise their potential. I believe that LYC has the potential but DYOR please.

 

[TabJockey]

Potential ....... multiples. Not everything will realise their potential. I believe that LYC has the potential but DYOR please.

Right exactly...it just boils down to...how many bags can you carry?

Just Kidding.

 

[Logique]

Nioka and TJ,
thanks for your work on this one. LYC is an analysts darling.
I've had a quick look at it. Won't it be 12 to 24 months before the earnings potential is realized, and also if the Chinese are 97% or so of the supply side, isn't there a danger of market price and supply manipulation. Also the LYC share price action is all over the place.

Genuine interest here, just playing devils advocate.