Calling the Bottom of the Market: Rare Earth Sector Sizzling with Deals and Opportunity.

Market BottomRare earth market news dominated by coverage of Lynas Corporation Ltd.’s (ASX: LYC) Advanced Materials Processing (LAMP) facility in Malaysia this last couple of days…this morning Neo Material Technologies Inc.  (TSX: NEM) released their first quarter results ending March 31, 2012, noting that revenues were USD$179 million versus USD$203 million in the previous quarter and USD$133 million in the corresponding quarter in 2011. We are anticipating Molycorp Inc.’s (NYSE: MCP) financial reports for the first quarter to be released tomorrow, May 10, 2012; I have literally touched town in San Francisco for the for Asian Metal 2012 International Rare Earth Summit where I was sitting next to Luisa Moreno, the Metals and Mining Analyst from Jacob Securities.

I called the market bottom on Facebook this morning, after seeing that Eric Coffin had done the same — just saw that Thom Calandra is on our heels. Published a piece on the buying opportunities less than 2 weeks ago titled The Rare Earth Sale of the Year: Buy Now!  and if you want to hear someone that I listen to, check out the interview I did with Gene Arensberg, Editor of the GotGoldReport – Investors Dive In – Significant Buying Opportunities Currently Exist. As a respected technical analyst, private investor and the “Vulture King”, Gene talked about the cascading selloff of stocks, having all sellers and no buyers in the market and how these factors make for a great time to buy stocks — so much so that he was selling his gold to invest in junior resource companies.

To me this was a flag that we were near the bottom.

Today, Gene pointed out that this extreme market volatility was expected and has arrived. He reiterated that now’s the time to hunker down but not get scared and reminds us that these types of events are always temporary and “soon-enough will be replaced by the opposite condition.” He too sees this crisis as an opportunity: “Just like in the latter months of 2008, these are the times when absurdly low priced stink bids can connect with disgusted, panicky sellers just wanting the pain to stop. For those Vultures who have resources to deploy and the confidence to deploy them, these are the times when our accumulated gold and cash can be very, very powerful.”

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With investors across all sectors asking “why is this happening?” we can look to Europe for some answers. One timely factor is the uncertainty over the Greece bailout. The outcome of Greece’s recent elections left no party winning enough votes to form a government. This means that forming a coalition government or having a second election are the only options. So far a coalition has not been formed and if clashes persist over the next few days, another election will likely be called in June. This political uncertainty is a cause of great concern for Greece’s international creditors who are calling for cost-cutting terms to be part of the multi-billion-dollar bailout.

Another factor is France’s recent election that ushered in Francois Hollande who campaigned on an anti-austerity platform. The installation of Mr. Hollande as the new President will effectively end former President Nicolas Sarkozy’s firm partnership with Angela Merkel, Germany’s Chancellor  – they both were committed to European austerity.

Both elections have resulted in even further financial market volatility that has impacted share prices across the board significantly. In addition they show how both political and economic factors can be mixed to cause investor fear and market instability. Despite these current trends, I remain confident that this is the bottom of the market and that we can expect a bounceback…

To me red means go — it's the time to buy.

Disclaimer: Lynas Corporation Ltd. is a RareMetalBlog sponsor. Tracy Weslosky is the CEO for Pro-Edge Consultants Inc. and is not licensed to make investment recommendations.


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Tracy Weslosky

About Tracy Weslosky

Tracy Weslosky is the Publisher and Editor-in-Chief of InvestorIntel, a leading global investment intelligence source created for the innovative and entrepreneurial minded that represents over 50 publicly listed companies globally that are listed on InvestorIntel.com. Tracy is also the Founder & CEO for ProEdge Media Corp., an online publishing and media production company since 2001; and is the Managing Partner for 724 Capital Corp., a business consulting firm that currently represents U.S. Rare Earths, Inc. Previously she has owned a boutique Investment Banking firm for 7 years that was the basis for a business reality television series called, DealFlow. Aired around the world for 3 years on CNBC World, WealthTV and many other networks globally; Tracy is a speaker, writer and an entrepreneur.
  1. Tracy, could you ask people at the San Francisco conference the following question:
    In your opinion, Which international court would give Lynas it’s best chance to win ONE TRILLION AUD DOLLARS?
    Legally speaking Lynas is at a crossroads. REE miner/LAMP refiner v. Real Litigation with significant downside risk, hence the Lynas Board’s need upfront of majority shareholder approval.
    As outlined in the RMB article and blog entries are at least Lynas Legal Complaints:
    1. International Collusion by the Governments of China and Malaysia.
    2. China: Intereference with business relations Lynas:Malaysia
    3. Chinese Quid Pro Quo a form of bribery. China and Malaysia. China doing “sweetheart deals for Malaysia and in return Malaysia does damage to Lynas.
    Nick Curtis, Lynas Board, Lynas in-house legal team, as well as the large Lynas investors of which I include us are not ignorant to the realities.
    We need to all sit together at a LYNAS SPECIAL SHAREHOLDERS MEETING and make decisions of which we can all live.
    The venue of international lawsuit should be in a international venue, preferably Europe, and handled by international attorneys, probably European with the clout and stature to sue the Chinese and Malaysian Governments for ONE TRILLION DOLLARS AUD in actual and punitive damages.
    As Tracy on RMB so aptly put it, “Lynas has conducted themselves like a fine southern gentleman and have been respectful and courteous in spite of some challenges.”
    There is also a time for “Southern Gentlemen” to fish or cut bait.
    The time is now. We as shareholders need to provide our majority support and additional monies so that Nick Curtis and the Lynas Board are able to most effectively deal with the international culprits hindering Lynas in Malaysia.

  2. Tracy, or ask them if Lynas Shareholders are better off if:
    Which more lucrative? Which option in best interests of Lynas Shareholders?
    Personally, I see tremendous upside either way. Malaysian and Chinese governments relent and let Lynas survive and thrive. Or Lynas takes on China and Malaysia Governments in international world courts for international collusion, interference with business relations, and quid pro quo/ bribery.

  3. Tracy, or if Henry or Jack Wu are closer to the Chinese/Malaysian Governments culpability (guilty award) in international court:
    Jack Wu said in reply to Henry…
    What if both China and Malaysian Governments are both culpable legally (found guilty) in international court, do you feel China should pay ONE TRILLION AUSTRALIAN DOLLARS and then how much should Malaysia pay?
    Malaysian government pay a second ONE TRILLION AUD?
    So full damages: 2,000,000,000,000 (two trillion Australian Dollars)?
    What about legal costs?
    Would international court award legal costs to Lynas? Would that be another 50 million dollars?
    What about court costs and travel expenses? Another 100,000 AUD?
    Would Lynas Shareholders accept 2,000,050,100,000 as full and final settlement from the Chinese and Malaysian Governments?

  4. Could I point out an obvious fact:
    There is a lot of money to be made even in tough markets.
    Let’s just take a look at the share market performance and profits of actively producing REE miners and REE manufacturers inside China.
    600111 and 600259 are at or exceeding all time highs within the Shanghai market.
    The Chines REE manufacturers Are actually outpacing the Chinese REE miners in year over year profits.
    Chinese REE mining/manufacturers are turning in 100 to 750 percent year over year increases in profits.
    600111 last week declared 2:1 share split and a nice shareholder dividend.
    Hey ROW REEs don’t get jealous, get into production and “have a healthy swim around” the waters are warm tropical, nice sea breezes and the cocktails are at pool side.

  5. Did it ever occur to you guys that Lynas failed to do the necessary work to get the local buy-in? That perhaps they let arrogance get the better of them? That they made a deal with the Malaysian government who did not bother to check with the local voting populace? And then you had a case of NIMBY (not in my back yard)? (Happens all the time in the US…) So when faced with public backlash, the Malaysian Government balks (since it is the voting populace that keeps them in power, not Lynas) and listens (or pretends to before an election <– hardly novel, either) to its voting populace? That there is not some vast conspiracy here? That is just that Lynas screwed up? And that the Malaysian government is just this disorganized?
    How about not over thinking it here and go with the obvious?

  6. Comments
    Hans Hillestad said…
    Was it Paul Harvey who said decades ago: “And now you know the rest of the story.”
    http://www.mysinchew.com/node/73266
    “Lynas will not have negative impact on MCKIP
    Controversial Lynas project News 2012-05-07 15:26
    By Massita Ahmad and Zarul Effendi Razali
    KUALA LUMPUR, May 7 (Bernama) — The controversial Lynas Advanced Materials Plant (LAMP), will not have a negative impact on the Malaysia-China Kuantan Industrial Park (MCKIP), says the East Coast Economic Region’s (ECER) Chief Executive Officer, Datuk Jebasingam Issace John.
    “Lynas is a good idea, a good project. We don’t want to have a negative impression of it right from the beginning,” he told Bernama.
    He also said that the government is working to resolve issues surrounding Lynas.
    He said this in response to whether the RM1.5 billion rare earth refinery located at the Gebeng Industrial Estate, would have a negative impact on the MCKIP.
    The LAMP is located close to the proposed 607-hectare MCKIP which is also sited at Gebeng town in Kuantan, Pahang, and within the ECER.
    Jebasingam said the MCKIP, which is expected to take off within the next six months, will enhance bilateral trade between Malaysia and China.
    The key components of the MCKIP include plastic, metal, electric and electronics, consumer products and renewable energy he added.
    “Malaysian businesses and businessmen from the area will be able now to enter into joint ventures with Chinese partners to develop these industries,” he said.
    Prime Minister Datuk Seri Mohd Najib Tun Razak had announced last Sunday that Kuantan has been identified as a suitable location to house a sister industrial park between China and Malaysia.
    He said the move was to reciprocate China’s efforts to set aside a 55 sq km piece of land in Qinzhou, Nanning, as the Qinzhou Industrial Park, as a joint venture project with Malaysia.
    In announcing it, Najib said the government was carrying out detailed studies on the implementation of MCKIP and has had meetings with investors from China on it.
    “Give us a little bit more time to finalise it and if eventually realised, we will see a higher level of investments, especially in Kuantan,” he added.”
    Paul Harvey: “AND NOW YOU KNOW THE REST OF THE STORY”
    What about quoting “Porky Pig”: THATS ALL FOLKS
    > 0:08> 0:08
    http://www.youtube.com/watch?v=gBzJGckMYO4
    Reply Tuesday, May 08, 2012 at 12:43 PM
    Hans Hillestad said in reply to Hans Hillestad…
    Oh really?
    Let’s see?
    1. MCKIP = Malaysia China Kuantan Industrial Park. 607 hectacres = 1500 acres within the same “fishing village” Gebang as Lynas LAMP.
    2. “Jebasingam said the MCKIP, which is expected to take off within the next six months, will enhance bilateral trade between Malaysia and China.The key components of the MCKIP include plastic, metal, electric and electronics, consumer products and renewable energy he added.”
    3. “He said the move was to reciprocate China’s efforts to set aside a 55 sq km piece of land in Qinzhou, Nanning, as the Qinzhou Industrial Park, as a joint venture project with Malaysia.”
    4. Oh let’s see. Chinese government and Malaysian governments are partners in both China and Malaysia.
    5. Oh let’s see. MCKIP is 607 hectacres or for you Americans that’s 1500 acre industrial park
    6. Oh let’s see. the Chinese-Malaysian governments joint venture in China called Qinzhou Industrial Park is 55 square kilometers, oh for you Americans that over 16 square miles.
    7. Oh yes the Lynas LAMP protesters? A bunch of Gebang local people in my opinion used as “pawns” on the big economic Chinese-Malaysia chess board. In my opinion: The Save Malaysia Stop Lynas (SMSL) have been lied to and abused by these big Chinese-Malaysian governments.
    What a story!
    This is the story of the decade in the REE world.
    Not just a pivotal turning point. THE STORY OF THE DECADE.
    Reply Tuesday, May 08, 2012 at 12:45 PM
    Hans Hillestad said in reply to Hans Hillestad…
    Porky Pig Cartoon Ending “That’s All Folks!” – YouTube
    > 0:08> 0:08
    http://www.youtube.com/watch?v=gBzJGckMYO4
    25 Jan 2009 – 8 sec – Uploaded by jersif
    Edited to clean up video and audio track. It’s the best one that you’ll find if this is what you’re looking for.
    Reply Tuesday, May 08, 2012 at 12:46 PM
    Hans Hillestad said in reply to Hans Hillestad…
    The Rest of the Story – YouTube
    > 4:56> 4:56
    http://www.youtube.com/watch?v=S6Ix56RtLNM
    9 Aug 2008 – 5 min – Uploaded by Khottabych
    Share Flag as inappropriate. Loading… Alert icon. Sign in or sign up now! Alert icon. Loading… Uploaded by …
    More videos for and now for the rest of the story »

  7. Hans Hillestad said in reply to Tracy Weslosky…
    Tracy, just saw what China Daily you know “The official mouthpiece of the Chinese Government” had to say about that sweetheart deal with the Malaysian Government.
    “KUALA LUMPUR – Malaysia’s northeastern port city of Kuantan has been identified as the suitable location to house a sister industrial park between China and Malaysia, Malaysian Prime Minister Datuk Seri Mohd Najib Razak said on Sunday.
    He said the move was to reciprocate China’s efforts to keep aside a land of 55 square kilometers in Qinzhou, Nanning as the Qinzhou Industrial Park, a joint venture project between China and Malaysia.
    “Kuantan is seen as the closest point to the city of Nanning and with that I have requested the state government of Pahang to prepare a 1,500-acre (607.29 hectares) land for China to set up the sister industrial park here,” he said.
    Najib said this in his speech during a gathering in Kuantan, about 250 kilometers northeast of Kuala Lumpur, which was also attended by his wife and several other government officials and local officials.
    Najib said the government was carrying out detailed studies on the implementation of the project and have had meetings with investors from China towards that.”

  8. Jack Wu said in reply to Rina Yong…
    Better idea?
    Go long Chinese REEs 600111 and 600259 both at new highs and stay short Lynas.
    See how that works for you?
    Any thoughts on MCKIP? Any pollution problems? Those plastics. Metals? Electronic wastes? Rare earths?
    Is SMSL group renaming themselves Save Malaysia Stop MCKIP Save Malaysia?
    Oh on second thought, Save Malaysia Stop Malaysia-China Kuantan Industrial Park?
    Will you all get paid to do that new one? You know to save that quaint little “fishing village” Gebang?
    Oh wait, just did a google earth on Gebang?
    Lots of chemical plants, petroleum buildup?
    Boy now I am really confused?
    Could you “straighten me out”?
    Oh by the way, I am a voting shareholder of Lynas and I want to sue big time?
    Wonder if China government thinks 1,000,000,000,000 yes ONR TRILLION AUSTRALIAN DOLLARS is a big number?
    55 square kilometers in Nanning China now that’s a big Malaysia-Chinese Industrial Park, or 1500 acres in Gebang Malaysia is also a big Malaysian-Chinese Kuantan Industrial Park?
    Oh maybe Malaysia-China joint venture wants to buy out Lynas LAMP? ONE TRILLION AUD dollars, not that much?
    Reply Wednesday, May 09, 2012 at 01:49 AM
    Jack Wu said in reply to Rina Yong…
    Hi Rina Yong
    Great idea. Petronas looks interesting.
    Petronas is a really big Malaysian company!
    Petronas a Malaysian State Owned Company?
    Does Petronas own land within Gebang? Kuantan?
    Do you work for Petronas?
    http://en.wikipedia.org/wiki/Petronas
    Reply Wednesday, May 09, 2012 at 02:15 AM

  9. “D”. Why the mystery “D” name?
    Possibilities:
    1. Currently sued by Lynas
    2. Work for either the Chinese Government or the Malaysian Government, and soon to be sued in International Court?
    3. Work for the MCKIP= 1500 acres of industrial park also “in your back yard” but owned jointly by the Chinese Government and the Malaysian Government.
    4. One of the hapless “pawns” in the giant economic Chinese-Malaysian Government chess game that have been misled, lied to and abused by your own “handlers” paid by the Malaysian and/or the Chinese Governments.
    So give us a name, an address and check one of the above?

  10. Oh so that’s Malaysian Governments defense in International Court?
    ” And that the Malaysian government is just this disorganized? ”
    Guess what the European Magnitrate shall say yo Malaysia as he is hearing the TWO TRILLION DOLLAR law suit brought by Lynas v. Chinese and Malaysian Governments?
    YOU LOSE.

  11. We read that the traveller asked the boy if the swamp before him had a hard bottom. The boy replied that it had. But presently the traveller’s horse sank in up to the girths, and he observed to the boy, “I thought you said that this bog had a hard bottom.” “So it has,” answered the latter, “but you have not got half way to it yet.”

  12. Could I point out an obvious fact:
    There is a lot of money to be made even in tough markets.
    Let’s just take a look at the share market performance and profits of actively producing REE miners and REE manufacturers inside China.
    600111 and 600259 are at or exceeding all time highs within the Shanghai market.
    The Chines REE manufacturers Are actually outpacing the Chinese REE miners in year over year profits.
    Chinese REE mining/manufacturers are turning in 100 to 750 percent year over year increases in profits.
    600111 last week declared 2:1 share split and a nice shareholder dividend.
    Hey ROW REEs don’t get jealous, get into production and “have a healthy swim around” the waters are warm tropical, nice sea breezes and the cocktails are at pool side.
    REEs as profitable as any business if you are in the “horse race” and the race is not rigged by Conspiracy and Collusion?

  13. If Lynas can’t operate, does that send REO prices back through the roof? Does that eventually take Lynas stock with it? Would it actually be a bad thing for Lynas shareholders to just sit on their ore and watch prices rise?
    Just saying…

  14. Oh sorry.
    600111 you know “that most favored” monopoly among monopolistic, oppressive and COLLUSIONAL CHINA.
    600111 only up 4 percent today in another wise neutral Chinese stock market.
    What’s that Italian saying “making money hand over fist”
    Or the Chinese. 888888888888888888

  15. Are you asking me which I would rather have?
    Choices:
    #1. 2,000,000,000 yes TWO TRILLION AUSTRALIAN DOLLAR lawsuit from COLLUSIONAL CHINA and MALAYSIA GOVTs
    or
    #2. China and Malaysia would play fair and according to International Rules of Law allowing Lynas to mine and refine?
    Let’s see: #1 get 2 TRILLION DOLLARS within 3 years or make 1 Billion Dollars per year mining and refining REEs.
    Personally I would go for #1 the TWO TRILLION DOLLARS.
    Reason: take 2000 years to earn TWO TRILLION DOLLARS in mining?

  16. Oh sorry I miss 3 zeros on 2,000,000,000,000. Yes TWO TRILLION DOLLARS.
    Think Malaysian and Chinese Governments have that much loose change laying around?
    Oh ok we’ll take it all in CHINESE GOLD.

  17. LOL… no mysterious “D” . Just the same old Jake. Signed in through Yahoo because for some reason the Post button won’t post otherwise. (it is shaded out no matter what I did except for signing in Yahoo)
    No I am not being sued. No I am not Chinese. I am just Jake with an opinion that clearly touched a nerve. LOL…..

  18. Veritas Bob–
    Good point and I apologize. I am not sure why RMB is not working for me. Well it is but the post and preview button are shaded out. I tried fussing with flash/quicktime/silverlight etc but no go. Then I tried yahoo and that worked but somehow logs me in as D and I have no idea why. I should have signed it Jake but realized it after I logged off and was too tired/lazy to log back in. Sorry.
    But really … I still stand behind the comment. What if it were that simple?

  19. LOL.
    wonder why Lynas didn’t build its lamp in austraila. close to its mine ..on solid ground ..out in the desert where no people are.

  20. The process needs lots of chemicals (like acids) that have to be bought and brought to the plant. Lynas was also convinced to come to Malaysia by highly valuable economic incentives. That is where Malaysia’s liability is embedded.

  21. Feel the soft winds of change and sun shining again in Gebang Kuantan Malaysia, or for that matter anywhere Non-Chinese REE miners and manufactures prepare and get ready to produce?
    Enjoy the free sun on your face and the nice breeze all around?
    A new day in Malaysia?
    A bright shining future for Lynas and Malaysia.
    Powerful forces at play within Malaysia have relented.
    And why not rejoice and be happy?
    Predict:
    1. Lynas LAMP TOL (temporary operating license certificate shall be delivered to Lynas Malaysia office within 30 days.
    2. Lynas shall drop any and all current lawsuits prior to the June hearing dates.
    3. Lynas LAMP shall be in operation within 60 days.
    So relax guys, and enjoy the soft Malaysian breeze, the great tasty Malaysian cuisine, and the bright morning sun shining in Gebang, or wherever the REE mining/manufacturing world is working to provide REE products to the world, whether within China or ROW.
    You futures are bright and relax and enjoy today?
    Tomorrow get back to work. Even all the REE projects becoming fruitful shall not satisfy the immensely growing need for REEs in the decades ahead?
    Kind regards,

  22. Feel the soft winds of change and sun shining again in Gebang Kuantan Malaysia, or for that matter anywhere Non-Chinese REE miners and manufactures prepare and get ready to produce?
    Enjoy the free sun on your face and the nice breeze all around?
    A new day in Malaysia?
    A bright shining future for Lynas and Malaysia.
    Powerful forces at play within Malaysia have relented.
    And why not rejoice and be happy?
    Predict:
    1. Lynas LAMP TOL (temporary operating license certificate shall be delivered to Lynas Malaysia office within 30 days.
    2. Lynas shall drop any and all current lawsuits prior to the June hearing dates.
    3. Lynas LAMP shall be in operation within 60 days.
    So relax guys, and enjoy the soft Malaysian breeze, the great tasty Malaysian cuisine, and the bright morning sun shining in Gebang, or wherever the REE mining/manufacturing world is working to provide REE products to the world, whether within China or ROW.
    You futures are bright and relax and enjoy today?
    Tomorrow get back to work. Even all the REE projects becoming fruitful shall not satisfy the immensely growing need for REEs in the decades ahead?
    Kind regards,

  23. Feel the soft winds of change and sun shining again in Gebang Kuantan Malaysia, or for that matter anywhere Non-Chinese REE miners and manufactures prepare and get ready to produce?
    Enjoy the free sun on your face and the nice breeze all around?
    A new day in Malaysia?
    A bright shining future for Lynas and Malaysia.
    Powerful forces at play within Malaysia have relented.
    And why not rejoice and be happy?
    Predict:
    1. Lynas LAMP TOL (temporary operating license certificate shall be delivered to Lynas Malaysia office within 30 days.
    2. Lynas shall drop any and all current lawsuits prior to the June hearing dates.
    3. Lynas LAMP shall be in operation within 60 days.
    So relax guys, and enjoy the soft Malaysian breeze, the great tasty Malaysian cuisine, and the bright morning sun shining in Gebang, or wherever the REE mining/manufacturing world is working to provide REE products to the world, whether within China or ROW.
    You futures are bright and relax and enjoy today?
    Tomorrow get back to work. Even all the REE projects becoming fruitful shall not satisfy the immensely growing need for REEs in the decades ahead?
    Kind regards,

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