improved fundamentals &.. technicals (soon enough sp at .05) the 200 moving average awaiting a leg up ... this time next year will be interesting, buy and hold is now reasonable consideration
Positive free cashflow (revenue less operating costs and CAPEX) of $191k for the month of March; a first in the history of Lynas
Amended financing agreements with both JARE (the Sojitz facility) and the Convertible Bondholder group reduced the cash cost of debt service through to 30 th June 2015 by $52m providing significantly improved liquidity.
Initial cost reduction programme largely complete with more than $35m in annualised savings from reduced overhead and input costs, well in excess of the $26m previously indicated to the market
Cash outflows $14m below estimated cash outflows shown in the December Quarter Appendix 5B
"As foreshadowed in the last quarterly report and again at the time of the release of the half yearly report,
this has been a difficult quarter. Production output was low in the early part of the quarter primarily due
to instability in the Solvent Extraction (SX) phase, specifically the complex SX5 stage which separates the
lanthanum and cerium from the praseodymium and neodymium. This translated to low sales revenue and
negative cash flow during that period. This negative cash flow was further exacerbated by restructuring
charges ($1.5m) and annual charges relating to business insurances ($2.5m).
March results were significantly better. Intensive work improved production output from the Phase 1 SX5
trains. In addition, the recently commissioned Phase 2 SX5 train commenced full production. The business
recorded its first ever month of positive free cash flow (Revenue less costs and CAPEX) in March."
"Based on recent performance the business currently expects to continue to deliver positive free cash flow."
Sentiment: Strong Buy
....One might ask "Why May?" The answer is there are a couple major and important Chinese industrial policy changes taking place in May. One is the lifting of the tariffs because of the World Trade Organization ruling. The second is a 22% to 35% increase in the rare earth resource tax for the domestic Chinese market. The second will offset the first for the international market and also will create a state of rising prices in China. When these policy changes are implemented the rare earth market might go into a state of chaos, so characteristic of the industry as buyers go in for material. The rare earth market is essentially on hold as buyers are staying on the sidelines to see the overall effect of these changes. Therefore, demand is minimal for now as consumers work off inventories and only buy for immediate or short term use. There will soon be one global market for rare earths with the same rising prices.
I believe the overall effect of these reforms will be rising prices because of the tax increase and a marking up in Chinese export prices. Also, the main impediment to restocking, that is the lifting of the tariffs, will abate. Some traders and companies are holding off on buying rare earths in major quantities because they believe lifting of the tariffs will cause prices to fall, otherwise they would restock. Once the tariffs are lifted and prices are rising companies will restock because Chinese exporters will be increasing FOB prices in response to a surge in domestic Chinese demand driven by the tax increase. Chinese prices will prevail and Chinese prices are going up as a result of industrial and tax policies.
Lynas has indicated Japan is not taking as much as LYC would like, so going by what was sent to Japan does not indicate production levels, just indicates what Japan wanted. So to be more clear, what is being sent Japan does not indicate if production was increasing or decreasing.
Just to be clear: Lynas sold 43% of sales volume total (out of 2014 tons) for the December Q to japan. That gives you 866 tons or 288.6 tons a month or 866 tons a Q for December. So 452 tons sold to Japan in the first 2 months is entirely possible.
Pretty simple 452 rounded up to 500 gives 750 tons or 0.75K tons for Q Which is much lower than what was shipped the last two Cal. Qs of 2014 to Japan. There may be an end of Q bump that will result in more output but that raises other Questions. This type of process is only efficient with smooth production cycles. This post looks good to the casual observer but to an active follower it raises questions and concerns.
"452 tons of rare earth from Malaysia in just the first two months alone of 2015"
"Read semi annual report as well as Amanda's letters and find out what was sent to japan for Q ending September 2014 and Q ending December 2014"
What does the first 2 months of 2015 have to do with the sept. and dec. Q's of 2014 of LYC production? Just making an observation.
For clarity yes 452 is a higher run rate than average for 2014 but lower than last two Qs of 2014. even after subtracting out China shipments in last Q
Molycorp shares jump on contract to provide materials for Siemens' wind turbines
NEW YORK (AP) -- Molycorp. Inc. said Wednesday that it will supply rare earth materials for use in Siemens AG's wind turbine generators over the next 10 years.
Shares of Greenwood Village, Colorado-based rare earth and metal materials company jumped 26 cents, or 49 percent, to reach 80 cents in premarket trading.
Molycorp will supply materials such as dysprosium, from its Mountain Pass, California facility. The material will be used in magnets for wind turbines.
Molycorp's stock has lost most of its value since peaking above $70 in 2011.
I find this article generally very bullish for the rare earth industry and a good vote of confidence that both Lynas and Molycorp are still viewed as viable producers (ex. Japan, Siemens).
Contraryj - I promised you the name of the little gold miner I mentioned, after I built a position in it. The name is Claude Resources (CLGRF)
Bottom Line: Like Lynas, it has been decimated over the last few years with the decline in gold. However, they have revised their production methods, lowered their breakeven by over 20-25% and found a higher grade location. In summary, they are already profitable at this gold price, have paid down debt and should be completely debt free by the end of the year. Their stock price has doubled twice since May (and no, ..I missed the first one) but I see it doubling it 2 more times in the next 1-2 years so there is still time to get in. Let me know what you think.
PS It is "just" being discovered by analysts and institutions again. Most early projections are for 60-100% gains within a year.
Unfortunately,... I believe it is due to dropping global demand - the global economy continues to decline. Another article highlighted that steel demand in China is down big in the same time period.
Thanks for the reply. I should have added only the 1st 1/4 report will indicate. I assume that any LREEs from Malaysia are all Lynas unless I have missed some other small production, so any suggestion of a clear increase from 2014 has to be motivating to those on a board that has gone all but dead on this company. Best wishes to all long term holders.
Nope, no way. Read semi annual report as well as Amanda's letters and find out what was sent to japan for Q ending September 2014 and Q ending December 2014 then multiply 452 by 3/2 or 1.5. Do this and repost.
Japanese bought ... 452 tons of rare earth from Malaysia in just the first two months alone of 2015 according to recent Investor Tel article. If the majority or all of this was from Lynas then this would seem to have very positive survival implications for Lynas and their total production of LREEs for Japan for 2015 (Malaysia sent 1200+ tons in 2014 to Japan). Is Lynas at last ramping up?
Maybe - if that serious 27% decline in Chinese REE exports to Japan for this Jan and Feb (see recent Investor Intel article) relate to increased sales by Lynas to its Japanese clients.
I think after the next REE Report the SP will double!
Sentiment: Strong Buy
The following came from an informative article on Investor Intel yesterday. Could this be the impact of Lynas on Japanese REE imports at last beginning to tell? Note the drop is for the first two months of this year alone.
"On March 23th, Chinese customs authorities released data for February, showing that the country’s rare earths exports decreased 15.78% from a year ago to 1,363 tons of rare earth to the U.S. and fell 27.69% to 1,130 tons of rare earth to Japan in the first two months of the year, respectively."