Ann: Lynas Malaysia Operating Licence Renewed for Three Years, page-58

Speaking of China and NdPr, did anyone else pick up on the call Lynas is selling its excess NdPr into China again? (albeit it, stressed by Amanda a very small part of Lynas production).


It made me take note because she corrected herself mid sentence, she changed her phrasing from "most" to "almost all" NdPr was being placed in Japan. I assume they have shifted away from holding over unplaced inventory because of the negative connotation of a "stock pile"? And or they are trying to generate as much revenue as they possible can in the near term.

Personally I thought holding over unsold inventory until demand and prices picked up was a sound strategy. Its not like it has a shelf life or needs to be refrigerated (effectively no cost to hold it).

On the last couple of quarterlies I'm piecing together Lanthanum and to a lessor extent Cerium seem to be going very well and will be key to the companies performance until NdPr picks up in time. Amanda has reiterated a few times the quality of their La is exceeding that on Chinese production, all forward La production has been sold out, and although she wont quantify how much reaffirms Lynas is selling at premium to the spot market. Due to their volume any small incremental improvements made here will make a big difference to the bottom line. Which I feel we're starting to see this with flat revenue off lower production in 1H20. As a lot of their costs are fixed, now production levels have returned to Lynas Next profits should soon follow.

On balance I feel we got a lot of good news this week. Just really unfortunate timing with whats playing out in the wider market. Given the new price point I'm changing my sentiment back to buy. Although I dont think we've seen the last of pain. Containment of this virus appears to have failed, and the markets appear far from done. I'm terrible at picking bottoms/tops. But I would say $1.50 is on the cards in the weeks ahead.