I think your projections might be conservative if prices move higher, Aus reckons $65/kg might be not out of reach.
If Lynas were to pay down debt by $100M to JARE by this time next year then a refinance might be an option and they might be able to pay down some of the bonds.
The risk for the bondholders is that when they do convert someone has to buy the shares - I don't think MtK want to be shareholders (and remembering there is a 20% ownership rule as well, plus FIRB considerations). Finding someone to take 3bn shares would be a huge ask and probably not possible in a short timeframe (market share price dependent) without killing the shareprice and the opportunity to profit along with it.
Perhaps JARE will want to keep the guaranteed supply portions of their loan deal and offer to extend the facility past 2020 in exchange to removing the cash sweep portion thus allowing Lynas to pay back bondholders cash in conjunction with a more lenient conversion. At this rate its not impossible for the entire JARE debt to be eliminated by the end of 2018/mid 2019 (6-8 quarters at $30-35M gets close - $45/kg ASP NdPr). And with no debt facility they can't demand guaranteed supply. Each deal is interwoven with the other so there can't be a blindside, it would need to be a round table discussion.
LYC Price at posting:
10.3¢ Sentiment: Buy Disclosure: Held
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