LYC.AX - The Only (High-grade) Rare Earths Miner and Processor outside China


Why LYC

  • Rare earths materials are used in everything from night vision goggles to cruise missiles and are also in increasing demand in electric vehicles, wind turbines, automation, electronics and oil and gas refining. They are key ingredients in permanent magnets used in electric vehicles and the aerospace and defence industries.

  • The federal government has highlighted rare earths mined by Lynas Corporation as critical to emerging technologies in a new minerals strategy. The critical minerals strategy maps out a vision for Australia to become a world leader in exploration, mining, production and processing as the global economy moves to electrification.

  • The largest high-grade rare earth developer in Australia. The world's 2nd largest Rare Earths producer. Only Rare Earths Miner and Processor outside China. An industry insider said the refining involved cutting edge technology and had not been done outside of China in decades. A Rare Earths Centre of Excellence outside China

  • One of Lynas' key products, neodymium and praseodymium (NdPr), is used in the manufacture of industrial magnets, which are used extensively by makers of goods such as electronics and cars

  • Strong Capital and Operating Cost culture

  • Mt Weld: a true Tier 1 resource. Continuing exploration and development to maintain a 25+ year Reserve at new rates. According to the company, its Mt Weld project in Western Australia is one of the highest grade rare earth mines in the world

  • A major Rare Earths mine supplying its processing hub at Kuantan in Malaysia. Lynas might also look at establishing similar capacity close to customers in Japan and South Korea

  • Japan receives about one-third of its rare earths needs from Lynas

  • US President DT raised the issue of Rare Earths in discussions with former PM Malcolm Turnbull in Feb 2018

  • Lynas and Blue Line, a leading US processor of rare earths materials, have signed a MOU on a JV that would put them on track to become the world’s only large-scale producer of separated medium and heavy rare earth products outside China. (China Ban, Trade War)

  • Wesfarmers has defended its takeover tactics since launching a conditional $1.5 billion bid for Lynas on March 26 that was rejected immediately by the Lynas board.

Fundamental

  • FCF Value ~ 17.5

  • 3y Growth ~ 80%

  • 3y ROE ~ 27%

  • ROCE ~ 6.3%

  • Dividend ~ 1.7%

  • Debt ~ 52%

Technical

Investment Plan

  • Entry strategy:

  • SP above Resistance line ~ 2.10

  • EMA8 > SMA22 (weekly) and Rising

  • Initial Purchase: invest min. 2% of capital

  • Position building:

  • invest another 2% once the next Trough appears to be formed

  • complete building the position to 6% of capital once the Peak after the first Buy is exceeded

  • Exit strategy:

  • ​Stop @ 1.75 (Risk 1R)

  • Target Price @ 12.3 (6-12 months)


  • Facebook Social Icon
  • Twitter Social Icon

© 2016 by aTrader