LYC - Lynas Rare Earths

[silmar]

a great post at http://www.hotcopper.com.au/post_single.asp?fid=1&tid=1509966&msgid=8621507

well worth the read (the extract from Weiss research of a few days back)

 

[notting]

I wonder if the protests of LYC in Malaysia are secretly fueled by Chinese student, spies etc etc. to hinder Lynus and maintain control of the worlds rare earth supplies which are a critical military component.

A good example of the way China uses it's forces was experienced by us here in Australia!! The Chinese Communist Party payed over 5000 of it's students and other Chinese in Australia to catch Communist sponsored buses to Canberra to overwhelm and brutalize human rights activists who were going to protest over Chinese human rights abuses by protesting at the Olympic flag going to Canberra on the way to China. The Chinese even attached old women and children one 5 year old was chased into the Canberra lake by a pack of Chinese thugs. This Chinese group behaved like a trained army. They were extremely well organised using two way radios to maneuver against the human rights protesters and secure positions and make attacks with long poles that were Chinese flags supplied by their Chinese Communist Party. The idea was to make the flags look like a show of patriotism yet where actually for intimidating and beating human rights activists. It was unbelievable and amazingly pretty much ignored by our press.

It would be interesting to see what kind of corruption exists in the Malaysian politics and find out if the Chines community over there which seemed to be a covert army in Australia, has anything to do with the movements against Lynus. We really need to wake up to these kinds of things as the Communist Chinese gain more and more influence in our world.
I bought some LYC today and this is one of my concerns over it.

 

[Starcraftmazter]

Not really the slightest bit worried about the protests.

 

[Julia1979]

Not really the slightest bit worried about the protests.

Hi there,
the political situation in Malaysia is hard to judge. In any case Lynas has become a political issue. Some say, they get the license before the elections in Malaysia, some say they have to wait until after the elections.

REE prices have just started to drop. With hundrets of explorations going on, all having high grades of the two main products from the Mt. Weld Distribution, that is Cerium oxide and Lanthanum oxide, these LREE prices especially Ce and La will have to collaps sooner or later in any case.

These two elements stand for over 70% of the Lynas basket.

So all the stories about billions of profits might turn out to be very wrong.

IN FACT: If Ce and La prices fall back to the level well below production costs (10$/kg) Lynas might never see green numbers at all.

It is absolutely vital for Lynas to produce ASAP, otherwise I see a lot of people

regards
Julia

Disclosure: I'm short in LYC and long in a couple of other REE-plays, basically HREE-explorers that I consider to be not only on LYCs buying list.

 

[ParleVouFrancois]

Julia all these years with China selling at rock bottom prices probably won't be repeated. Also just recently if you've noticed the domestic Chinese price, it's extremely pumped up when it's exported, doubling in price for FOB vs Domestic REE due to various taxes/duties, added to this is the enforced restrictions on exports from China. This is probably to further encourage the location of factories etc on the Chinese mainland, hence outside of China, Lynas + Moly remain the main suppliers in the short term.

Also I noticed you've said exploration for REE, it's not that it's hard to find REE, it's just hard to find them in economic deposits (e.g. tonnage or grade high enough, or issues with large amounts of radiation). Also processing said REE isn't exactly childs play, hence the LAMP facility is a vital part of any valuation to be placed on LYC.

Sure, IF the prices for the REE fall back to $10 then obviously Lynas won't make a profit, but the probability for this occurring is pretty low. This is like saying "well if oil falls back to $10 a barrel, Exxon Mobil won't make a profit", well of course, this is all hyperbole unless it actually occurs though.

Given that China has export restrictions, is attempting to shut down black market exporting of REE, and is consolidating what they now themselves believe to be a vital national resource, I'm at the least skeptical of a repeat of prices around $10. To justify the current price, a longer term Mt. Weld basket price of $30 or so is required, which to me seems very probable, Chinese VAT, exportation limitations, increasing demand for REE are all going to be supporting the price. I don't believe the current prices are sustainable, so hopefully management gets a few contracts going with floor prices around these levels. As I mentioned just above, $30 is all they need to justify a share price of around $3.

I noticed you gave the reason of "more deposits being found" as why REE prices are declining. It doesn't matter how much REE we find in the world, we need to extract it and make it into the purified forms in order for them to be used. I think it's just the massive increase in REE's cooling off for a bit, and longer term we'll see prices closer to $40-$50 FOB China.

Anyway I've noticed you trolling over in HC, so I don't exactly expect you to take my opinion on board in the slightest, I am merely replying in order to make sure noone is grossly mislead over here.

JM.

 

[Julia1979]

You are the guy with the blog, buying in big yesterday right? Good luck, young boy!

I'm not saying, that all REEs will plunge once new producers will come to the market.
But most certainly Cerium und Lanthanium will. This is over 70% of the Mt. Weld Basket.

I'm long in quite a few HREE explorers for takeover reasons, ALK long term and ARU short term (expecting good newsflow in the coming 6 month)

I have not been "trolling" on HC, please check my posts. It's just that people don't accept any criticism and bank on what they see if they check the weekly Lynas basket price > 200$ and multiply this with 20kt. This has nothing to do with the profits coming out at the end IMVHO. Look at the offtake agreements and when they were closed. Do you really think these companies pay more than an average of 20$ a kg?

With production costs of 200-300 million $ at phase 2 (full production) I don't see profits exceeding 150 million. That is less than 10 Cents a share.

Considering the market cap approaching 4 billion USD I simply see a lot more downside potential than going even higher, especially because LYC still has no pre-operational-license in Malaysia yet. Time will tell!

regards
Julia

Disclosure: LYC short

 

[drlog]

Look at the offtake agreements and when they were closed. Do you really think these companies pay more than an average of 20$ a kg?

Where did you get that figure from? By all means, LYC's profitability depends on high REE prices. I personally think they will stay higher than $20/kg but will not stay around the current price especially once supply increases. There is just too much upward pressure on the prices.

Anyway, to each their own.

 

[Julia1979]

Where did you get that figure from? By all means, LYC's profitability depends on high REE prices. I personally think they will stay higher than $20/kg but will not stay around the current price especially once supply increases. There is just too much upward pressure on the prices.

Anyway, to each their own.

While Lynas showcases the current basket price weekly, there is no information about the prices of the offtake agreements published. For a good reason, I suppose.

Most customer agreements (5) were in 2008 or earlier, one in Jan. 09 and one in Nov. 2010

There is no price information about the first six contracts, in the seventh contract there is a hint:

The contract price is related to the China FOB market price for the product at the time of delivery plus delivery costs from FOB Kuantan to port of delivery. The contract price reflects the surety of supply Mount Weld Rare Earths and the LAMP are bringing to the market by being located outside of China. The contract has an evergreen clause, allowing the contract to extend upon mutual agreement.

Assuming that all contracts were closed at a discount to the prices at the time of the signatures, all contracts should be well below 20$/kg. It is possible, that there is a dynamic component in the contracts in case of significant rise of prices (inflation + REE price related) but the general deal of advance contracts is price stability for both sides (to the benefit of the customers in this case).

Any delay will cause a double problem for Lynas at this stage of development.

1. Since the offtake agreements have first priority over free market activities, these customers will have to be served first in order to avoid contract penalties etc.

2. The REE prices will drop once LYC and other producers are getting ready to ramp up production. Time is money. This phrase applies with a high leverage, it's a brutal race especially for all LREE producers.

My estimates are based on theses thoughts. Any critical comments are very welcome!

regards
Julia

Disclosure: LYC short

 

[nioka]

I note that Julia1979 has been continually discredited on another forum. Lets hope that on this forum she posts only properly researched posts and maintains the correct ASF standards. On the other forum she has been shown to be shorting LYC and downramping consistantly to achieve results. On there she is known as the scarecrow.

 

[notting]

I thought a similar thing to Julia1979 about Atlas Iron when it was trading at about 96c in December 2008. They were boasting about new contracts and first shipments etc etc but never saying what the price of the shipment was or the price per ton in the contracts. It thought it must be low because otherwise they'd be telling us. I got nervous took a small profit and got out. Atlas has been trading above $4.00 lately. Hmmm.
Lynus looks cheap to me. and as soon as this Global Debt crises sorts itself out a bit I'm in hard!

 

[ROE]

LYC fundamentals stacks up for me, I am in ..let the shorter do their short

http://www.tasmanmetals.com/s/NewsR...Earth-Element-Project-Declared-Project-of-Nat...

 

[Julia1979]

I thought a similar thing to Julia1979 about Atlas Iron when it was trading at about 96c in December 2008. They were boasting about new contracts and first shipments etc etc but never saying what the price of the shipment was or the price per ton in the contracts. It thought it must be low because otherwise they'd be telling us. I got nervous took a small profit and got out. Atlas has been trading above $4.00 lately. Hmmm.
Lynus looks cheap to me. and as soon as this Global Debt crises sorts itself out a bit I'm in hard!

quite an argument there. Talking about Lynas looking cheap: take a look at the Lynas shareprice in December 2008. Today it is a 4 billion USD-explorer sitting on loads of overhyped La and Ce. If they do receive an operating license for the LAMP this year, they will be able to take advantage of the hype and my shorts will be covered instantly. This is the risk I'm taking. If however the Malaysian government should decide to delay the decision about the license until after the upcoming general elections (politicians tend do think in categories of preserving power), Lynas has a problem. That is the risk of being long at the moment. All JMHO.

regards
Julia

Disclosure: LYC short

 

[SilverRanger]

quite an argument there. Talking about Lynas looking cheap: take a look at the Lynas shareprice in December 2008. Today it is a 4 billion USD-explorer sitting on loads of overhyped La and Ce. If they do receive an operating license for the LAMP this year, they will be able to take advantage of the hype and my shorts will be covered instantly. This is the risk I'm taking. If however the Malaysian government should decide to delay the decision about the license until after the upcoming general elections (politicians tend do think in categories of preserving power), Lynas has a problem. That is the risk of being long at the moment. All JMHO.

regards
Julia

Disclosure: LYC short

In your opinion, which explorer(s) is/are going to catch up if LYC LAMP delays for another year?

 

[Julia1979]

In your opinion, which explorer(s) is/are going to catch up if LYC LAMP delays for another year?

ARU, ALK, GWG and MCP

most likely the whole sector due to another big spike in HREE and LREE prices

It's a very strange situation. The whole world is looking at LYC and MCP, both very high valued due to prices that have to come down (especially LREE) and are still able to bubble up.

regards
Julia

 

[nioka]

ARU, ALK, GWG and MCP

most likely the whole sector due to another big spike in HREE and LREE prices

It's a very strange situation. The whole world is looking at LYC and MCP, both very high valued due to prices that have to come down (especially LREE) and are still able to bubble up.

regards
Julia

Julia, Is it right that on another forum you are quoted as being "long" on ARU ( and in the red) and "Short" on LYC ( and in the red there too). If so you certainly have a vested interested in ramping one up and the other down. Your credibility there has been shot to pieces as I expect it will be here also. Is it also right that on that forum you are referred to as the "scarecrow".

The world is looking at LYC because it is so far ahead of all the others that it is a given fact that LYC is winnning the Rare Earth race. To time the difference you do not need a stop watch you just use a ten year calender. The others fill spots all along the way with blanks for the first two years between LYC and the rest of the field.

 

[Julia1979]

The world is looking at LYC because it is so far ahead of all the others that it is a given fact that LYC is winnning the Rare Earth race. To time the difference you do not need a stop watch you just use a ten year calender. The others fill spots all along the way with blanks for the first two years between LYC and the rest of the field.

apparently we have a different definition of "given facts"

Since you seem to be able to look into the future, please allow me some questions:

1. Can LYC win the race without a license to operate in Malaysia?
2. If not, when exactly will the required licenses be issued?
3. Have you noticed, that the LAMP has become a political issue in Malaysia?
4. Do you know, when the next general elections will be in Malaysia?
5. Can you imagine, that politicians delay unpopular decisions until after important elections?

TIA
Julia

 

[Intrinsic Value]

LYC fundamentals stacks up for me, I am in ..let the shorter do their short

http://www.tasmanmetals.com/s/NewsR...Earth-Element-Project-Declared-Project-of-Nat...

Yeah me too I think any competition is a long way away.

 

[ROE]

The best time to buy a good stock back by strong fundamentals is
when they have issues....

FLT has issues during GFC
People dont travel, people with too much debt, US business not profitable ..

CCP expand too fast, buy up stupid debts, bad staffs and collection rate...

all these companies all has issues but one thing they have in common is strong business model and fundamentals and all thing will comes to pass ..best time to buy in is when they have issues...

Long term those issues will eventually work through, disappear or
already factor into the current depressed price.

Buy sit back and drink nice coffee until the day
Strong fundamentals back by extra-ordinaries good news, Mr Market is cheerful
and breaking champagne open bottle....by then most people will know what to do

Lynas is back by strong fundamentals and there is a need for these products
as the world move on to more electronic gadgets, greener cars and high tech equipments...

Long term Lynas stack up...

 

[nioka]

apparently we have a different definition of "given facts"

Since you seem to be able to look into the future, please allow me some questions:

1. Can LYC win the race without a license to operate in Malaysia?
2. If not, when exactly will the required licenses be issued?
3. Have you noticed, that the LAMP has become a political issue in Malaysia?
4. Do you know, when the next general elections will be in Malaysia?
5. Can you imagine, that politicians delay unpopular decisions until after important elections?

TIA
Julia

ALL those questions have been shown to be misleading on that "other forum". They are devious in their intent. They have ALL been answered with satisfactory information.

I am closer to the action than you may be aware both with company information and on that "other forum" under a different name. I know your agenda and suggest that ASF is not the correct place to ply your devious trade.

I do not intend to answer your questions for the simple reason that I believe that the ASF members are capable of researching the true facts. Good research shows that there is no reason to believe that Lynas will not soon be a producer of a valuable product that will be in short supply for years to come. You will just have to accept that the long and short positions that you have are probably the wrong way around. Your short should have been long and your long should have been short. Maybe you got it the wrong way around because we are the land down under, our night is your day and what we see as black and white you see as white and black.

 

[oldblue]

I don't have a problem with posters putting the other side of the argument, particularly when they declare their positions, long or short.

There are certainly issues in LYC getting its product to market but I'm sure everyone here has done their own research and have made their decisions accordingly.

Disc: Not holding - long nor short.