A decade or so ago, China tried to use their then control over a large percentage of the worlds rare earth supplies (critical to EV motors) to punish its trade adversaries. A little company called Lynas ran into all sorts of problems getting its processing facility in Malaysia up and running, fending off unsubstantiated environmental claims by a group that many thought was resourced covertly by China. Their shares dropped to 6c. Eventually, through the efforts of a brilliant CEO ad the backing of Japanese industry they prevailed. They now have a dominant position in the world rare earths market and a SP often now above $6. Allowing for a 10:1 consolidation, that's a 10 times increase. The turning point was getting production going and passing break even point. From there the SP just climbed and climbed.
Barra's story does not have the same drama or scale as that of Lynas, but there are significant similarities. If China moves on cobalt like it did on rare earths, Mt Thirsty is looking a very valuable resource. The value is there now, as a hedge against the China's threat. To me it seems only a matter of time before there is movement here. What is more exciting, is the prospect of the new CEO making plans to start production without waiting for suitors - to take control of the company's own destiny.
The Barra SP is cheap just on the gold resource. Good results will catapult the SP. Re-rate the value of the cobalt resource (currently valued by the market at $0) at the same time. The penultimate duck to join the row is good management. Barra is fast approaching production of gold and cobalt seems under way. The last duck will fall into place with just a tiny bit of luck! GLTAH!
BAR Price at posting:
2.1¢ Sentiment: Buy Disclosure: Held
