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#Malaysian Licence Updated
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Added 8 months ago

During the March 2024 quarter Lynas expects maximum production rates of approximately 300tpm growing to 750tpm in the June 2024 quarter.

LYNAS RARE EARTHS LIMITED (ASX:LYC) - Ann: Malaysian Licence Updated, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

24/10/23, Share Price Reaction: $6.82 up 12.4%

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Return (inc div)   1yr: -13.23%   3yr: 33.60% pa   5yr: 34.26% pa

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#Social Licence
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Last edited 9 months ago

05-Sep-2023: I've been trawling through some recent MoM (Money of Mine) podcast episodes today while doing other things, and I came across a very interesting discussion on Lynas, and why they are not well liked by the locals in Kalgoorlie. It suggests that they don't rate a Social Licence to operate as being particularly important, and may give some insight into why things went so pear-shaped for them in Malaysia - apart from the court challenges and protesting from Chinese-sponsored protest groups that may have been mostly "rent-a-crowd" participants, or so I was previously led to believe.

If you're interested in Lynas as a prospective investment, or are already invested in the company, or even if you're just interested in how a company like Lynas can piss off the local community in a big way and how that might affect their future prospects, this is worth a listen:

Lynas Confirms Kalgoorlie Cost Blowout and Red 5 cash? | Daily Mining Show - YouTube

Plain Text: https://www.youtube.com/watch?v=iW78Zhs8tyo

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August 29th, 2023: Their Show Notes: "More annual results with intriguing company commentary for us to pull apart today. We get the ball rolling with a snippet from Monday’s Fortescue (FMG) investor call, honing in on why Fiona Hick departed after just 6-months in the job. We have an in-depth discussion on Lynas (LYC), looking into their Kalgoorlie plant build, the social licence to operate and their current rare earth strategy. Then, Red 5’s (RED) annual result caught our eye, with a close look at trade payables. Ramelius (RMS) get a mention with majority ownership at Musgrave (MGV), while Hillgrove Resources (HGO) is our final talking point of the day, with the aspiring copper producer releasing some copper intercepts from depth."

CHAPTERS

0:00 Preview

1:11 Intro (with Brodes)

7:07 Fortescue investor call

10:16 Lynas Kal update, Community standing & Rare-earth strategy

24:16 Red 5 post up annual numbers

37:11 Ramelius get majority ownership at Musgrave

37:35 Hillgrove approaching first production

-------------------------------

DISCLAIMER

All Money of Mine episodes are for informational purposes only and may contain forward-looking statements that may not eventuate. The co-hosts are not financial advisers and any views expressed are their opinion only. Please do your own research before making any investment decision or alternatively seek advice from a registered financial professional.

-------------------------------

Disclosure: I do not hold Lynas (LYC) shares, but I have done in prior years, and it was far from a smooth ride. I would be worried about a company that is prepared to drain Kalgoorlie's parks and reserves irrigation water reservoir - because they (LYC) have the right to - a very stupid decision by the Kalgoorlie-Boulder City Council to be sure - and then spend so little supporting the local community. The locals already hate them and Lynas are doing very little to try to improve their standing in the community in which they wish to operate.

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Valuation of $6.75
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Edited 10 months ago

29th FY23 Report LYC Trades at ~$7.00

Noted: FY23 headline Numbers are all down lower. NPAT , Sales Revenue, EPS

LYNAS RARE EARTHS LIMITED (ASX:LYC) - Ann: Appendix 4E and FY23 Financial Report, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

REE spot price:?

year 2030 could be 'ho hum' once supply meets demand.

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Rare but not necessarily clean:

Rare earths: China is firmly in the saddle, despite the Pentagon investing millions | Institute for Rare Earths and Metals (institut-seltene-erden.de)

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#FY23 Financial Results Present
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Added 10 months ago

LYNAS RARE EARTHS LIMITED (ASX:LYC) - Ann: FY23 Financial Results Presentation, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Noted the slide no percentage comparison: - 43%=310 / 540 Sales: -20% ( Return not Good )

Phew, not easy to read LYC financials.


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mmm. Cannot see ant Out Look statement,

  • FIN FY23 Financial Results Announcement


Revenue of $739.3m remained strong. EBITDA, at $377.7m was 51% of revenue with NPAT at 42% of revenue. Whilst strong, these results were lower than those in FY22 when market prices were at record highs. “During the year, we invested $595m in capital projects and completed the year with a cash balance of $1 billion, providing funding certainty for completion of our key growth projects.

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Heres more a better view of position

LYNAS RARE EARTHS LIMITED (ASX:LYC) - Ann: Appendix 4E and FY23 Financial Report, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Appendix 4E and FY23 Financial Report

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EPS -43%= 34/59

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#News
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Last edited one year ago

The Malaysian government has kicked the can down the road by granting Lynas a reprieve in the form of an operating licence variation which will allow Lynas to continue processing lanthanide concentrate in Malaysia until 1 January 2024. This should give Lynas the breathing room to complete the build and commissioning of their West Australian processing operations, which will be critical if the Malaysian government ultimately decide to reinstate the operating licence restriction from 1 January 2024 (or some later date).

This decision avoids a huge hole being blown in Lynas' P&L for the latter part of 2023 and potentially early part of 2024, which is why the stock has rallied so hard over recent days.

It's unclear which way the Malaysian operating licence discussions will ultimately go, but it smells to me like the Malaysian government is gearing up to reimpose the restriction. I think this extension is indirectly acknowledging the dissonance and harm the policy pivot will have on Lynas, and is a consolation prize that at least gives Lynas the time to get their plan B in place even though it won't compensate them for the devaluation of their investment in Malaysia.


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#Becoming a substantial holder
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Added one year ago

State Street Corporation and subsidiaries named in Annexures to this form..

Class of securities Number of securities Person’s votes Voting power

Ordinary 46,783,709 46,783,709 5.01%

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#Date of Quarterly Report & Bri
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Added one year ago

...will announce its quarterly results for the period ending 31 March 2023 on the morning of Friday 21 April 2023

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#Research
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Added one year ago

As intimated by the string of recent broker upgrades, the Lynas sell-off has been getting folks' attention (including mine). Whatever Lord Elon or his minions say apparently strikes fear and panic (or joy) into the hearts of the herd and would appear to have turbocharged Lynas' descent.

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As part of my Lynas homework, I came across references to research and commentary from Adamas Intelligence who seem to be a (the?) go-to rare earths research house. They've provided some quite useful commentary regarding the Tesla announcement and authored the pay-to-read "Rare Earth Magnet Market Outlook to 2035" report (though posted some useful excerpts/findings here). They also authored + released for free the "State of Charge: EVs, Batteries and Battery Materials" report covering 2022 H2 global passenger xEV (i.e., HEV, PHEV and BEV) market performance which is tangentially relevant to Lynas.

In a nutshell, Adamas are forecasting a structural supply deficit for rare earths through 2035. Combined with concerns over China's supply dominance and the comparative environmental "dirtyness" of their supply operations vs other non-China minor players, there seems to be a pretty solid outlook for Lynas who are proven, profitable, and growing their production capacity (their Malaysian licencing woes notwithstanding).

Forward estimates look up and to the right if you ignore last year's result as a PCP anomaly, and extrapolating out 2-3 years using some low to mid range PEs suggests there are better than average odds of easily achieving 10-15%p.a. growth at the current ~$6 SP.

I took a ~1% starter position today @ $6.05 and will probably average down if it keeps tanking.

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#ASX Announcements
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Added one year ago

Quarterly announcement attached. They seem to be over the water issues in Malaysia.

-Works progressing now in Malaysia (to process mixed rare Earth carbonate feedstock / construction of the permanent disposable facility) and Perth (rate Earths processing facility). Full steam ahead.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02624848-6A1133437?access_token=83ff96335c2d45a094df02a206a39ff4

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#Bull Case
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Added one year ago

This morning in the AFR Barrenjoey named it’s top battery metal picks ahead of earnings season. Lynas was one of its top picks with a $12.50 price target and a 46% upside from the current share price. The section on Lynas is copied below:

“Barrenjoey is positive on $7.7 billion Malaysia-based rare earths miner Lynas Corporation and Mr Morgan expects its Kuantan processing plant to deliver for shareholders.

“I think Lynas could beat expectations,” he said. “Last quarter the town water supply they used to run their plant had a catastrophic event and that issue’s been fixed. They’ve got the opportunity to get the plant flat out, so I think there’s upside risk to the numbers.”

Lynas shares are down 22.8 per cent over the past year, but remain 333 per cent higher over the past five years as Western governments support rare earths producers outside China, as strategic assets.

Barrenjoey forecast Lynas to post a net profit of $363.6 million on sales of $896.9 million in financial 2023 on an EBITDA margin of 54.9 per cent. It has an overweight rating on the stock and $12.50 share price target, which represents 46 per cent upside to the $8.58 market price on Wednesday.”

Disc: Held IRL

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#AGM Address by Kathleen Conlon
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Added 2 years ago


As an ethical and environmentally responsible rare earth producer, with capability and customer relationships built over the past decade, Lynas was well positioned to benefit from the robust rare earths market during the year. 

All ethical here.

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So looks ok, What we can mine and cannot mine is all ok. The choices we make could be governed by a few......


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#Summary: Response to Appendix
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Added 2 years ago

LYC under the ASX query microscope

  • Release Date: 05/10/22 10:18
  • Summary: Response to Appendix 3Y Query
  • Price Sensitive: No


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Valuation of $9.20
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Added 2 years ago

5/08/2022

@suttree’s straw has prompted me to check in on Lynas. I tend to pay more attention to holdings in my portfolio when the share price is struggling, which is a mistake!

I notice there are no current valuations for Lynas on Strawman. I think it’s a difficult business to value because of so many unknown future variables. However I am bullish on the future for EVs and the increasing demand for NdPr to produce light weight permanent magnets required to reduce the weight of EVs. I believe the cost of NdPr for an electric car is in the ball park of only $300, so it’s a no brainer for EV companies to use it.

My valuation is based on earnings forecasts provided by S&P Global on Simply Wall Street. It is important to note that forecast earnings data on Commsec is less optimistic than this.

The forecast future revenue, earnings and free cash flow all look good, at least heading in the right direction!

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Using McNivens StockVal formula and the following variables (see the StockVal forum on Strawman for the spreadsheet)

APC = 24.5% (future ROE over next 3 yrs based on analyst forecasts. Historical ROE was 22%)

Shareholder Equity = $1.20

Dividend = 0

Reinvested earnings = 100%

Required Return = 8.6% (fudged this to match todays share price)

I get a valuation of $9.20 which is around the current share price. Keep in mind this is NOT a target price. This means you could buy the shares today and expect a return of 8.6%, that is IF the analysts forecasts turn out to be correct. As Scott Philips says, ‘IF’ is the smallest big word in the English dictionary!

When I buy a business I am looking for an annual return of at least 10%, preferably closer to 20%. However, valuation is far from an exact science and I wouldn’t be selling a business like Lynas at the current price. For me it’s a HOLD.

Disc: Held IRL (2% weight)

13/07/2021 Assuming Value/share = E/share X PE Forecast earnings: (Consensus of 4 analysts Simply Wall Street) E (2023) = 350 million Value (2023) = $350 million / 901 million shares x 30^ = $11.65 ^ I have used a PE of 30. I think this is reasonable given forecast growth of 60% and forecast ROE of 20%. Current value discounted at 10% per year = $11.65 X 0.8 = $9.32/share Simply Wall Street DCF value based on a discount rate of 6.9% is $10.27 Using the lower value estimate of $9.30/share. Disc: shares held in RL portfolio.

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#Dragonbridge attack concerns
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Last edited 2 years ago

According to a story in the AFR this morning, Lynas suspects fake social media accounts are spreading disinformation and political agendas hostile to its rare earths business.

Some key points from the story:

  • Lynas has received evidence it was the target of a coordinated cyber campaign that acted in the Chinese national interest.
  • US cybersecurity firm Mandiant told Lynas that fake social media accounts had sought to incite protests in April and May against the company’s plan to build a rare earths processing plant in Texas.
  • coincided with final negotiations between Lynas and the US government over a $US120 million financial support package for the Texas project  which is part of a US plan to break China’s stranglehold on production of the 17 rare earth elements needed for electric vehicles and defence tools like drones
  • Two other North American producers of rare earths were targeted
  • consistent with a broader, pro-China cyber campaign dubbed as “Dragonbridge”

Mandiant has no proof the Chinese government was involved.

Lynas has been the subject of disinformation campaigns in Malaysia for some years, however, this is the first time Lynas has seen evidence of direct links between fake social media accounts spreading disinformation and political agendas.

Disc: Held IRL

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#Awarded US$120M DoD Contract
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Added 2 years ago

LYNAS AWARDED US$120M CONTRACT TO BUILD COMMERCIAL HRE FACILITY

Lynas Rare Earths Ltd (ASX: LYC, OTC:LYSDY) (Lynas) is pleased to announce that wholly owned subsidiary, Lynas USA LLC, has signed a follow-on contract for approximately US$120 million with the U.S. Department of Defense (DoD) to establish a first of its kind commercial Heavy Rare Earths (HRE) separation facility in the United States.

This mutually beneficial contract supports Lynas to establish an operating footprint in the United States, including the production of separated Heavy Rare Earth products to complement its Light Rare Earth product suite. As a result, U.S. industry will secure access to domestically produced Heavy Rare Earths which cannot be sourced today and which are essential to the development of a robust supply chain for future facing industries including electric vehicles, wind turbines and electronics.

Lynas worked closely with the DoD on the Phase 1 contract for a U.S. based Heavy Rare Earth separation facility (announced 27 July 2020) and the company is delighted to have reached agreement for a full-scale commercial HRE facility.

Construction costs for the HRE capability as submitted in June 2021 are fully covered by this DoD contract, which is sponsored and funded by the U.S. DoD Industrial Base Analysis and Sustainment (IBAS) program.

Lynas plans to co-locate the Heavy Rare Earths separation facility with the proposed Light Rare Earth separation facility (announced on 22 January 2021) which is sponsored and half funded by the U.S. DoD Title III, Defense Production Act office.

Following a detailed site selection process, the facility is expected to be located within an existing industrial area on the Gulf Coast of the State of Texas and targeted to be operational in financial year 2025.

Feedstock for the facility will be a mixed Rare Earths carbonate produced from material sourced at the Lynas mine in Mt Weld, Western Australia. Lynas will also work with potential 3rd party providers to source other suitable feedstocks as they become available.

Lynas Rare Earths CEO and Managing Director Amanda Lacaze commented: “The development of a U.S. Heavy Rare Earths separation facility is an important part of our accelerated growth plan and we look forward to not only meeting the rare earth needs of the U.S. Government but also reinvigorating the local Rare Earths market. This includes working to develop the Rare Earths supply chain and value added activities."

Disc: Held IRL

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#Quarterly Report
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Added 2 years ago

note, generally these reports are called Quarterly Report Appendix 4C

The bears are in the market so skittish holders all over the markets at present 2022.

The 2Q22 production update revealed a 33% lift in total Rare Earths Oxide production on 1Q22. Strong demand translated to favourable commodity pricing, which resulted in a record sales revenue of $202.7m over the quarter (vs $121.6m in 1Q22).

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And for Comparison 30th September 2021

so the trend is still up going on these #s eg Sept Q Sales R': $121.6m vs Dec 2021 $202.7m up $81Mill at 67%


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Discl: RL,

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#4Q 2021 - Record Sales
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Last edited 3 years ago

Lynas released its 4Q21 report this morning.

My take

  • Record quarterly sales revenue ($185.9 million) and sales receipts ($192 million)despite the Malaysian restrictions on the number of workers permitted on site during COVID.
  • FY21 revenue ($465.5 million) appears to be in line with analyst forecasts ($473 million, SWS data)
  • Strong cash balance of $860.8 million, up from $101.7 million FY20. Although $413.9 million of this was revenue from capital raising (see Cash Position attached below)
  • NdPr oxide prices have more than doubled over FY21 but prices have softened slightly since April.

 Full ASX Announcement

Highhlights:

  • Quarterly Sales Revenue: A$185.9m (Q3 FY21: A$110m
  • Sales receipts: A$192m (Q3 FY21: A$133m)
  • Closing cash balance: A$680.8m (Q3 FY21: A$568.5m)
  • Total REO production: 3778 tonnes (Q3 FY21: 4463 tonnes)
  • NdPr production 1393 tonnes (Q3FY21:1359 tonnes)
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#$14.8 million gov’t grant
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Last edited 3 years ago

Full ASX Announcement

Lynas Rare Earths Limited has just been been awarded a $14.8 million grant as part of the Australian government’s Modern Manufacturing Initiative.

The grant will enable Lynas to commercialise an industry-first Rare Earth carbonate refining process that has been developed by our inhouse research and development team. The new process has been tested at bench scale and has proven effective in producing a higher purity Rare Earth carbonate that can feed the Lynas Malaysia plant as well as the proposed U.S. Rare Earth processing facility.

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Valuation of $2.25
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Added 5 years ago
Takeover price
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