End of Financial Year, page-28

From http://en.ruidow.com/price_x.php?id=5284&pid=48&ppid=21&k=Rare earths
Price April 28 for CE L 14,000 RMB H 15,000 RMB
12 May to June 16th no change price was L 12,000 H 14,000
29 June L 13,00 H 14,000
So there is the link and dates I am using Could you supply your dates and links to data.

First Free cash is not a good judge. Don't pay a vendor and cash goes up. Liabilities go up as well so profits do not change. It is great management on Lynas part to do what they do to keep adequate Cash but Long term only Profits can Pay the bills. Please look at Page 10 of H1 Report they loss 67M in the 6 months of H1 and that includes 22M of debt forgiveness otherwise 89M. Now current prices will help H2 17. Very small chance they could break even on P&L, all depends how fast the contracts let them sell at current prices. Unless there is a sudden reversal Lynas should make money H2 2018. Insufficient data in Q1 and Q3 reports to know for sure. Why don,t you and all the others touting large positive cash flows make some guesses as to H1 profits in AU$

I totally agree with this statement.
"There have been numerous posts suggesting free cash at these production and price levels will be at least, at minimum, A$20m to A$25m per qtr from this (September)"
But many people saying it does not increase the importance of CASH. First As I said Free cash can pay bills for a little while. Long term it takes profits and only profits can pay bills. When liabilities grow much faster than assets something will break eventually. So could we please Look at profits. Please note the large difference between Free cash flow and Profits last two years. Sooner or latter this must be brought into balance. The bigger the bills get the harder it is to pump free cash up. Lynas is losing money!!!

Take a look at all people saying Large free cash. They ignore profits and with the exception of Goofy no one tries to do calculations. Just pie in the sky speculation. I also expect Lynas may want to hold Free cash below $25M to preserve Restricted cash for a few Qs. I have no idea what they will do but if it was me I would pay down some of the accumulated Liabilities on the balance sheet. (these are not loans) and keep cash below 25M. Current , less than 1 year, Assets and liabilities are way out of balance. Balance sheet is on page 11 of H1 report. If they do this will you sell because your speculation is wrong?


Why do I do this? simply things are looking good. I believe stock is going up. there are several things that will limit The stock price. The Major ones ones JARE debt. Mt K Debt regardless of how it is cleared. Total size of plant and Prices put a limit on total bottom line profits and when compared with debt this is a problem. The pumpers are thinking of making making million and not even considering negatives.

On the positive side current REE prices are more than enough to start generating profits. The plant is still improving Quantity, Quality, and COP / KG. Why don't you put out some guesses as to Quantity, price and COP for the next 6 half's or 3 years and figure out what total profit will be and how that compares with the total debt problem. Note when you guess you may be wrong. I guess and have been wrong allot. I believe it is better to guess and modify as new data comes in that just assume a rosy picture. But if you put out hard numbers for next 2 halfs and are right or wrong you will be able to change future predictions more accurately and know what to expect.

Just for record other than La and Ce which I think will contribute little even if the priced went up 50% first day of Q1 while Quanity sold doubled same day, I have stop making predictions till the Annual report comes out in August. Q3 Report was very good but the Q reports really are missing allot of data. The Q4 report will give data on contract lag because it includes tons and $ for what is sold. If I am right it will show zero free cash flow. They will have a better cash flow from operations and could show a large free cash flow. I think they will pay down liabilities Maybe set up reserve for overburden Removal. Which will reduce free cash. No impact on profits. I personally would not want to let go of the 28M in restricted cash till I saw the stability of current prices. Then again being able to say you do not need it any more might be a very good thing for stock price. Also keeping Free cash below 25M might be seen by Jare and MT K as legal but not in the spirit of the refi and that would be bad. We should know in a month. This is something that has many arguments on both sides. I do not mind being wrong because I learn how my thinking matches management and that is valuable.

Free cash is important, for me P&E is more, many disagree. I don't think anybody will disagree that when they move in opposite directions for any extended period any good investors wants to understand why and what is going on. If profits are going up and free cash is going down that is just as bad. I would want to know why. Things that could cause this is paying big dividend that profits cannot support (always good for SHORT term SP). Heavy uncontrolled expansion. Buying companies for more than they are worth, and others.

Do I talk too much about profits? Yes, absolutely, totally agree. It is a reaction to all the talk about Free cash with no mention about profits. Just trying for some balance. When thinking about buying and selling I look at both and also the long term trends of assets and liabilities and what in the future could change trend. I always look at history first they look for what can change trends. I never straight line history into the future. Stock price is going up nicely. Continued increase in REE prices will make the slope steeper. Profits of even 0.1 C a share could cause it to skyrocket. Mt K exercising even 100M shares and selling could depress it. 200M could drop it allot. Not making money H1 would cause a real drop. The key here is not which ones are correct!!! The key is what future events will make which items more likly or less likely to happen. Sometimes non events are very important to. For example If stock goes to 12C and MT K does nothing, that that means they have raised their delta between option price and Market. Very good for SP. If they exercise in early July and delta between 5 C and SP is still about 5C then that means for awhile Mt K puts a ceiling on SP about 5C over option price. I am ignoring the last 18 M of first option.