Worlds Largest non Chinese Rare Earths Supplier Cash Flow Positive. Undervalued by Market. Time to Invest?

By chrishughes, April 27, 2017

I am not sure of the level of awareness in the US and Canada about materials called Rare Earths, their availability as a critical material for use in modern technology from electric vehicles, robotics, cellphones, autocat converters to military applications and the companies that currently produce these materials.
This is an introduction to a company which I consider to be really undervalued by the market at present. Listed in US as LYSCF.OTC, in Australia as LYC.AU and in Europe LYC.ASE

Lynas Corporation Limited released its March quarterly report yesterday. I am fortunate to be included in the analysts and investors briefing by Amanda Lacaze, MD after the release. In Amanda’s own words the quarterly was a “very good result”, and she hopes to be able to report at the next June quarterly update that Lynas has achieved an excellent result.

Lynas is the only rare earths producer of significance out of China, and is now the world’s second largest producer of NdPr and with no in-house downstream production, Lynas is the largest supplier of NdPr to the free market.
We were given guidance on expected COP which is tracking down and could come as low as USD$6-7 kg in future periods. The current quarter basket price for Lynas output was AUD$ 20.10. Even with today’s very low RE prices there is generating a very good margin. RE prices are currently trending upwards having recently started this trend off a very low base in historical terms.
We are receiving reports coming out of China of shortages for some materials. With China supplying circa 85% of ROW consumption, this is a significant development.

I also have an analyst report prepared after the quarterly release that values the LYC shares at AUD$0.17c/share. Current market value as of yesterday’s close was AUD$0.094c.

I am not sure if this company is of interest to your readers. I have been a long term shareholder and have recently increased my exposure because of the unique position Lynas holds in the RE supply space.
I have a friend who could provide further information that supports his reasoning for holding a very significant stake in Lynas and his thoughts of why Lynas is currently selling at a discount to fair value.
The company is now cash flow positive with further improvements expected in each quarter. If and when the price of rare earths, in particular NdPr move up the gains will all go straight to the bottom line. I have some rough projections which are now proving to be reasonably reflective of actual performance.

Please let me know if this company is of interest and I can provide further information to assist readers decide if this company is worthy of their consideration for investment. A search of the company’s website will provide useful information to assist your understanding of the company.
http://www.lynascorp.com/

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