DD, with Lynas cash flow increasing each quarter, and trend in RE pricing looking very positive, there must become a time in the next 18 months when Lynas could re finance the JARE debt.
The Japanese have linked JARE finance to a guaranteed supply of NdPr. Seems hard to believe the Japanese would consider placing this NdPr supply arrangement at risk?
Therefore I believe it is reasonable to expect JARE to be supportive of a re finance deal which gives Lynas a new increased loan for a much longer term, favourable interest rate, and principal repayments that gives Lynas management flexibility to deal with some if not all of the C Notes.
Not sure just how much cash Lynas requires for working capital, but certainly the current level of cash at bank is excessive.
Lynas would still have expectations of the outstanding warrants being exercised which will bring in further cash. Add this to the current bank balance and it is conceivable that Lynas could have circa $150m in the bank this time next year, less any sweep from Jare which would obviously result in reduction of JARE loan.
The runway may just be long enough to allow Lynas management to deal with the notes before conversion date?
LYC Price at posting:
10.3¢ Sentiment: Buy Disclosure: Held
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