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30/07/15

14:59

Post #: 15721948
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Originally posted by Pennie ↑

Thank you Sparkie.
The article really reinforces the support from Japan already evidenced by the willingness to defer debt and interest payments. Especially when the presenter uses 'we' when speaking of managing costs, etc. They really seem to be working more as partners with Lynas.
The most encouraging aspect is that, while empathising with his audience in expressing his frustration at the perfect storm that has beset the industry and Lynas, he cleverly moves on to describe Lynas' strength over its non Chinese competitor who filed for bankruptcy protection. The most telling is the show of confidence Lynas management, which the world had expected to fail in atrocious market conditions:

'As the prices of rare earths had continued to drop, there was a rumor that LAMP might finish without starting operation.

However, monthly operating cash flow turned positive in December 2014 and monthly free cash flow also turned positive in March 2015.

If I take the liberty of deliver my true message, contrary to my expectations, it’s a little surprising that Lynas has maintained sound management.'

He also freely concedes it is difficult to increase cash flow in current market conditions.

The reason for the lenders support is obvious to me - if Lynas can show it can survive in this tough market, imagine what it will do when the market turns?

As to the talk here of interest payments, it is very clear to me that Lynas has enough cash on hand to meet its interest obligations. the reason the amounts are still sitting in the restricted accounts and not yet paid out is simply another show of support from the lenders. In essence, they are basically saying, you owe us that money but we will leave it there for your potential use in the business if needed in these tough times.

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Thank you Pennie, an excellent objective post. Sums up the Sato sentiments very well.

LYC Price at posting: 3.6¢ Sentiment: Buy Disclosure: Held
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