EDITOR: | July 28th, 2016 | 8 Comments

Amanda Lacaze of Lynas on recent rare earth trends

| July 28, 2016 | 8 Comments
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July 28, 2016 — There seems little need to introduce Lynas Corporation Ltd. (ASX: LYC | OTC: LYSDY) to readers; after all, it appears, each time we write about this Australian rare earths producer, it unleashes a torrent of well-informed (and sometimes torrid) comment from InvestorIntel readers. Lynas remains a company of red-hot interest to investors. 

Lynas has been back in the news of late, reporting record sales in the June quarter due to higher production which compensated for still weak REE prices. As I noted at the time, Lynas was progressing on two fronts:

  • The company’s production of neodymium-praseodymium (Nd/Pr) — the key magnet rare earth elements — for the 12 months to June 30 exceeded the target of 3,840 tonnes. As Lynas pointed out, this was the second consecutive six-month period in which it had exceeded its Nd/Pr target. This meant that interest on the loan facility under the agreement with partners Japan Australian Rare Earths (JARE) would be reduced by 0.5%
  • Lynas last month repaid another $5.74 million; as a result of its recent repayments, the JARE senior loan facility has been reduced by a further 0.3%.

But there was another headline in recent days in one news publication that tells us something more about the Lynas story. That headline read “Lynas is a big winner with Honda hybrid engine breakthrough”, and that is an issue that is discussed in this interview.

In this interview with InvestorIntel Publisher Tracy Weslosky, Lynas Managing Director Amanda Lacaze spells out some positive developments that are offsetting the prevalent gloom that hangs over REE prices. One such is the Honda breakthrough in engineering out heavy rare earths from its new engine — Amanda spells out why that is good news for Lynas.

Other points covered in this interview:

  • How bringing Lynas to full production capacity was no easy task.
  • The demand for neodymium-praseodymium.
  • The relationship with the company’s lenders.
  • Japan’s ongoing concern about rare earth supplies.
  • Why the rare earths market still wears the pain of the 2011 bubble.
  • Why we will never again see 2011-style rare earth prices.
  • How the next challenge is to expand the Lynas business.

Disclaimer: Lynas Corporation Ltd. is an advertorial member of InvestorIntel.


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Comments

  • Kitjean

    As a long, long suffering investor in the REE market (2011-the height of the rare earth investing frenzy), today I finally parted ways with Lynas. Hurt to receive literally pennies on the dollar in cashing out but I’ve decided Lynas, despite recent positive reports, will never see SP remotely near the $1.00+ I paid 5 years ago. There’s been great optimism that .10 possibly even .20 a share can be expected which for new investors paying the current .05-.07 SP is very enticing, but for “old” (literally and figuratively) investors like myself, must admit defeat. Lynas and Great Western were touted as among the strongest contenders of the scores of junior miners delving into the arcane world of REE. GW is still listed in OTC exchanges but with so many zeros after the decimal is virtually worthless. If Traci will permit me offer my investing advice which I now believe is as valuable if not more so than the “expert” analysts of today who seem to have amnesia of their prognostications of 5 or 6 years ago. There are two REE companies that have consistently received favorable comments and that I cannot find vulnerable flaws that would preclude their ultimate success AND reward investors as well as their management. Drum roll please….Ucore and Alkane. Start you own DD as you’re always supposed to do but I’ve done most of the work for you.

    July 28, 2016 - 8:30 PM

  • Andrew

    By looking at the SP performance of Lynas for long time, it seems Lynas is not taking care by strong fund or institution investors. Otherwides, with the recent improvement on production, the SP should be at the level where Lynas made a big dilution of share placement for survival because Lynas already proves it can survive.
    Unfortunately, Mr shen has gone. I enjoyed to challenge what he post and you can see how bad is happening in China.
    If this is the platform to send message to Lynas, I would suggest AL can concentrate to look for fund or institution investors. The retail investors in this intel cannot help.

    July 29, 2016 - 6:54 AM

  • Lok Chong

    Kitjean, I understand and symphatise with you. I am born a Malaysian educated and practised as a CA in Australia, I knew that the hungry Malaysians vampire bats would make a feast of the opportunity (more controversy and delays meant more red packet) presented.
    Being an ethic Chinese and having worked in China, HK and Taiwan for 15 year I know PRC will continue to keep the much acclamed pretender/liberator of the REE space and their Japanese backers off-balance, thus reducing and committing Lynas to perpetual life support.

    With continuing high volume turnover in the ASX and the present day volatility Lynas offers unprecedented trading opportunity with disciplined risk managed approach and discipline of ‘buy low, wait as long as it takes, and sell into the inevitable next good news/hype’ making 10, 15 or even 20% each time. You can make 3 or 4 trades a year knowing that the Japanese cannot take Lynas off life support.
    Lynas the vehicle is beyond fundamental analysis. Management is all about putting forth a brave face, containing interest load and cash burn rate, foreever a price-taker and praying for REE price respite. It is like running a
    vehicle to conserve fuel, close to empty and with pennies in the pockets.

    Kitjean, trade Lynas with no emotional attachment to recover your losses and soul. There is no better opportunity to apply Warren Buffet’s dictum of “buy low, sell high”. The patient will not just die on you – the Japanese has under-written that, and written-off Amanda from Chinese medicine.

    July 29, 2016 - 6:57 AM

  • Tim Ainsworth

    “NdFeB: hard to get rid of the off-season effects of the downturn will continue to run”

    2016/7/29 16:42:03 Source: Industry Online ChinaIOL Author: Fuli Yao

    “This week, the market is still NdFeB maintain previous levels. Off-season by the impact of serious buyers dominate the market, the overall atmosphere is poor because the upstream and downstream terminal therefore lower prices serious, especially serious decline in the low-end product line. The high-end market by the new energy-saving motors and energy can still affect operation of the market. Although NdFeB factory orders fell significantly from the previous month, but the industry last year or less.”

    “NdFeB market is not out of the off-season, the terminal demand is still insufficient, especially in the low-end market prices and turnover is very low. The high-end market is acceptable, but not much room for growth, coupled with the recent market upstream of the rare earth industry generally downstream products is difficult to play a leading role, the short-term NdFeB market will remain weak and more stable operation.”

    http://newmat.chinaiol.com/ntp/q/0729/01171311.html

    Yet Lynas has no problem selling all the NdPr it can produce, and that’s likely to be far more than most suspect.

    Go figure.

    July 29, 2016 - 10:31 AM

  • Kitjean

    Thank you Lok Chong for your sentiments regarding Lynas. If I’m not mistaken Lynas missed a quarterly debt payment which was the final straw for me to liquidate my long held shares of this company. I’m glad they’re hanging in there and credit must be given to the new CEO/COO for the last two years of her stewardship. I had gotten Buffet’s message reversed, thought it was “buy high sell low. I’ve had an order placed to buy Alkane shares all week but it is as if the company doesn’t exit, zero volume. Still believe this sleeper Australian miner will explode once the rest of the world discovers it.

    July 29, 2016 - 7:21 PM

  • Lok Chong

    Hi Kitten, I remembered my first foray in the ASX was buying pennies stocks Alkane and Oil Search in 1975 soon after I left uni and started working for Ernst & Whinney (now Ernst and Young). Next door was Pring Dean stock broker. Alkane was mining around the Orange region of NSW where I attended school. Oil Search sounded good was the lowest of the pennies stock at that time.
    I too admire Amanda for keeping the boat afloat and on course in gale force storm. Fortunately she has bullet-proof Japanese pumps on board.

    July 30, 2016 - 2:25 AM

  • Lok Chong

    Sorry Kitjean my ‘smart’ computer self-corrected on me.

    July 30, 2016 - 2:27 AM

  • Lok Chong

    Hi Kitjean, on Alkane you have to be extremely careful and not be carried away by hype and sentiments. No one can keep the lid on ‘big money to be made’ news from the market unless it is a 100% family run operation with no or retarded employees and sub-contractors.
    Be particularly careful when there is no liquidity (volume turnover) in Alkane shares for long periods which I find hard to believe. Lynas is opposite. You can get in and and out any time whenever the ASX is opened. There are sentimental buyers supporting the last non-Chinese REE underdog left standing, short term opportunistic investors (me included), insiders, many fools and late comers.

    July 30, 2016 - 3:11 AM

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