aussie $ collapsing = rising ree price, page-32

Your chart 1 for phase 1 at current REE prices FOB China is similar to the press report of a few weeks ago which forecast LYC's revenue at $287 & $3.6 mil
profit.

The questions that long term investors have to ask are:
(a) how long will the basket price stay at $26?
(Indications are that China's crackdown on illegal production
and smuggling is starting to work. We also need info on
western users depletion of stockpiles now that LYC is comming
on line as a reliable non-Chinese supplier.)*
(b) what premium will LYC get above notional basket price?
(c) when will Phase 2 sales kick-in

Your chart seems to anticipate Phase 2 kicking-in by listing production options
of 11K, 16.5K & 22K.

* IMO, just as the Chinese have overcooked price on the downside over the past
year, there is a liklyhood that they will also overcook restrictions on supply
causing prices to overreact upwards.

In the longer term,IMO, it is in China's economic interest maintain a significant
gap in domestic pricing vs FOB to give Chinese manufacturing a competitive edge, and the ideal situation for China is higher FOB prices now rather than lower ones; hence the crackdown on illegal production and smuggling.

There is still a WTO case against China by Japan ,Germany and others re the REE
price spike in 2010-11 and current low REE prices benefits the Chinese defense.

The rationalisation of REE production under 4 major Chinese corporations
is further evidence that the Chinese are serious about taking control of
illegal production and smuggling.

So in summary, IMO, for long term fundamentalists, forward estimates have to be made on basket price FOB China & what premium LYC can get over this,
what is reasonable timing for the LAMP being up to 22K ton/p/a & what
effect will LYC's announced costcutting have on the bottom line.

Cafa's chart highlights sub 11k ton/p/a ex Phase 1 only @ currently low
basket price at a PE of 10. Given the new LAMP, Mine & world class deposits
with a long enterprise life and a product which will be in growing demand,
a fair P/E should be 15+, IMO.

With kind regards
Moorookamick