LYC - Lynas Rare Earths

[qldfrog]

Share the feeling but we all know why
Wages and higher costs with red tape, green tape,tax rates
You can have the above and still make it.. Germany the example
But you need effiiency ..

 

[Chief_Wigam]

Cost savings with cheap labour in Malaysia was no doubt the initial reason. US because transport costs too high from Australia and reduced risk

But with travel banned in and out of China due to the Coronavirus, won't this increase prices?

 

[barney]

Cost savings with cheap labour in Malaysia was no doubt the initial reason. US because transport costs too high from Australia and reduced risk

But with travel banned in and out of China due to the Coronavirus, won't this increase prices?

Chief … You never told me …. the guitar in your avatar is ??

PS Re Lynas … For anyone interested, I am backing a couple of their past employees on a Spec VML in which they are involved … 3-4 year plan Could be wrong, could be worth a lot if right!

 

[Chief_Wigam]

It is a Gibson Les Paul 2015 model. It's called a Les Paul Less Plus. It's a bit lighter than a regular LP but has the same sustain. It's my main axe

 

[barney]

It is a Gibson Les Paul 2015 model. It's called a Les Paul Less Plus. It's a bit lighter than a regular LP but has the same sustain. It's my main axe

Sorry @Chief_Wigam … I didn't realise you had mentioned it earlier in the thread. Thought it may have been a Les

Also have an old LP (1972) Its beat up and needs work but its been like a brother to me ... and they are heavy!

Just to keep the thread on topic … Lynas Chart has been working down from June 2019 high around $3. Recent swing low of just over $2 …. looks to be forming a higher low at the moment … Under $2 would not be good.

 

[VERUS8]

Cost savings with cheap labour in Malaysia was no doubt the initial reason. US because transport costs too high from Australia and reduced risk

But with travel banned in and out of China due to the Coronavirus, won't this increase prices?

Cheap labour, cheap consumables and a tax free holiday for 12 years were reason enough to invest in Malaysia. Unfortunate that the Fukushima disaster, a strong social media movement against the company due to very low level radioactive material and an incompetent government turned Lynas into a lemon. Plenty of short term trading opportunities, like most of the companies in the REE sector, but never a good long term investment.

 

[Boggo]

LYC seems to be shaping up nicely on the daily chart, weekly has a way to go still.
Something triggering an interest.
(I did buy some on the break of 1.48 yesterday)

(click to expand)

 

[Country Lad]

I wonder if it is not a case of the tide raising all the boats. There are a significant number of share charts that look just like the All Ords. Need to be prepared with good stops in case the tide goes out again.

 

[Boggo]

I wonder if it is not a case of the tide raising all the boats...

Yes, definitely true but there are some that seem to be be ignoring a falling tide too.

(click to expand)

 

[Boggo]

Released today, may be helping it along ?

 

[Country Lad]

Yes, definitely true but there are some that seem to be be ignoring a falling tide too.

They are the ones I am most interested in. I did the same in 2016 and 2019, find the ones acting differently, find the reason and make a list of the ones which may be likely to beat the market when things start improving. Far more successful than simply following charts.

 

[barney]

Lynas in the News today. US Department of Defence contract.

Phase I funding provided by the DoD will allow Lynas and Blue Line to complete detailed planning and design work for the construction of a U.S. based Heavy Rare Earth separation facility, in line with DoD Phase I milestones.

 

[Chief_Wigam]

Here is UBS valuation ...


UBS Research - Last month on 22/04/2020 9:55 PM
Lynas Corporation "US DoD Tender Win Highlights Strategic Value" (Buy) Morgan



Lynas wins a tender with the US Department of Defence
Lynas has announced that they have been successful in being selected for a Phase 1 of a US Department of Defence tender for a Heavy Rare Earth separation facility. This is good news. Firstly this in time could lead to a sizeable funding contribution to a new downstream business unit for Lynas. Secondly the news reinforces the underlying strategic value of Lynas business as the only non-China producer of rare earths. This value does not appear to be in sharp focus for the equity market at the moment, with Lynas trading at a ~50% discount to our NPV. Once the world begins recovery from COVID-19, we believe that global supply chains may be realigned towards a greater diversity of sources. Lynas is well placed to benefit from this in our view through new customers in the US and Europe and with potentially better pricing terms.


What are the benefits of a heavy separation facility to Lynas?
Lynas currently sells separated light rare earth products. These light rare earths constitute 95% of Lynas resource by volume and ~80% by value if all products were separated. But the heavy rare earth products are not separated by Lynas at present, so it does not capture all of this revenue/margin opportunity. Heavy Rare Earths are currently sold in an intermediate product via auction to China separators. These separators earn a margin that a Lynas facility in the US could capture and potentially expand. Lynas ore bodies are ~5-7% Heavy Rare Earths by volume in-situ, but if separated could lift from ~5-10% of revenue now to ~15-25% based on recent prices.


We do not yet factor in the potential value of a downstream facility
We do not yet include a heavy separation facility in our forecasts due to uncertainty about the economics (capex, opex, funding). In concept we think the facility might cost up to $100m. Reuters has indicated that the US Department of Defence may contribute up to two thirds of this funding task. The additional EBIT of Lynas moving downstream might be >$10m+ per annum, but split with Blue Line in the JV. Lynas should capture in our view the largest part of this from providing the feedstock, and the equity return should be very attractive if funding is forthcoming from the US Department of Defence.


Valuation: $2.68ps (DCF, 10% d.r. and US$60/kg long term NdPr)
Our price target of $2.70ps is based on our NPV estimate.

 

[Dona Ferentes]

Lynas Corporation Limited announced on 22 April 2020 that it has been advised by the U.S. Department of Defense of the DoD’s intent to award a Phase I contract for a U.S. based Heavy Rare Earth separation facility to Lynas.

Lynas has subsequently seen media reports in the U.S. of political debate on the merits of supply from the U.S., supply from U.S. allies, and supply from other sources.

Lynas remains one of two companies selected for Phase 1 of the project, however Lynas understands that the U.S. government’s progress on Phase 1 is currently on hold while those political issues are addressed. We are committed to developing our Heavy Rare Earth separation facility and work is continuing on the plant design and engineering. We continue to regard our Heavy Rare Earth separation facility as an attractive strategic project.

- yes, but the orange comb-over is an impediment.

 

[Chronos-Plutus]

Lynas Corporation Limited announced on 22 April 2020 that it has been advised by the U.S. Department of Defense of the DoD’s intent to award a Phase I contract for a U.S. based Heavy Rare Earth separation facility to Lynas.

Lynas has subsequently seen media reports in the U.S. of political debate on the merits of supply from the U.S., supply from U.S. allies, and supply from other sources.

Lynas remains one of two companies selected for Phase 1 of the project, however Lynas understands that the U.S. government’s progress on Phase 1 is currently on hold while those political issues are addressed. We are committed to developing our Heavy Rare Earth separation facility and work is continuing on the plant design and engineering. We continue to regard our Heavy Rare Earth separation facility as an attractive strategic project.

- yes, but the orange comb-over is an impediment.

Lynas looks to me, technically, that it will have a pullback. It has had a decent golden cross run, using 5 day and 20 day moving averages; and the Relative Strength Index, 14 day short cycle, is now showing overbought.

https://www.tradingview.com/chart/?symbol=ASX:LYC

A strong case though on a share price rise based on longer term fundamentals:

- Lynas' Malaysia plant restarted at 70% capacity (https://www.asx.com.au/asxpdf/20200504/pdf/44hjdf47ks2zp5.pdf)
- Lynas awarded by US Defence contract on heavy rare earth separation facility
(https://www.asx.com.au/asxpdf/20200522/pdf/44j1lrbpq5y8sy.pdf)
-

 

[Dona Ferentes]

Lynas has signed a Phase I contract with the US Department of Defense (DoD), for work to begin on building its US-based heavy rare earth separation facility.

The Phase I funding allows Lynas to complete a detailed market and strategy study as well as detail planning and design work for the constriction of the facility, with that work set to be completed in the 2021 financial year.

"We are very pleased to have signed a contract with the DoD for this Phase I work," said Lynas chief executive and managing director Amanda Lacaze. "Heavy rare earths are essential for the high performance magnets used in electric motors, and Lynas has the feedstock, intellectual property, and track record to deliver a heavy rare earths facility in a timely and low risk manner. We look forward to working with the DoD to progress this project."

 

[barney]

Gapped up out of 2 month range ... looks good.

There was some publicity on Rare Earths on the TV over the weekend. Hopefully the RE publicity will spill over into some interest on my VML shares as well

 

[Dona Ferentes]

Gapped up out of 2 month range ... looks good.

There was some publicity on Rare Earths on the TV over the weekend. Hopefully the RE publicity will spill over into some interest on my VML shares as well

I saw that on TV - the Alkane spinoff at Dubbo; ASM listing this week.
https://www.aussiestockforums.com/threads/asm-australian-strategic-materials.35477/

 

[Dona Ferentes]

Lynas Corporation is set to unveil a $400 million capital raising when it hands down 2020 financial year earnings on Monday, Street Talk can reveal.

Investor sources told Street Talk that the $1.9 billion rare earth metals producer had hired Bank of America and Canaccord Genuity to oversee a deal which would see new equity raised via a placement and rights issue.
The mooted capital raising comes as Lynas races against the clock to build and commission a cracking and leaching plant at Kalgoorlie after being ordered to stop producing low-level radioactive waste at its operations in Malaysia.

 

[Dona Ferentes]

https://www.australianmining.com.au/news/lynas-makes-strides-amid-market-recovery/

.... Beyond the progress of the processing facility, Lynas has expanded its product range by separating its production of neodymium-praseodymium (NdPr) to two separate products, to deliver more value for the company. Price outcomes from separated Nd and Pr were positive, Lacaze said, with the former realising a premium of around $US2-3 ($2.7-$4.1) per kilogram over NdPr.

The company is also separating its medium and heavy rare earth feedstock, which is currently sold in the form of SEG (samarium, europium and gadolinium) to a separator in China.
“The market is strong and attractive and we expect that demand for and price of these elements will continue to grow as demand for high power electric motors grow,” Lynas chief executive Amanda Lacaze said.