Lynas is gaining ground and putting quite a bit of distance between the competition as Amanda forges ahead with her self claimed “aggressive” expansion plans. The call provided much insight into Amandas’s difficult challenge featuring the government of Malaysia mitigated by a comprehensive plan B should it be needed...
Amanda started the call by emphasizing that Lynas has $1.12B in cash reserves giving Lynas “plenty of firepower” which means Lynas is “well placed to capture any upside (growth) opportunities”. I found this a theme throughout the entire call as Amanda made no excuses for the current or future share price...
Next, Amanda addressed the Elon Musk initiative by summing up the one fact that makes Elon’s comments dismissive. Permanent magnet motors (PM) can produce equivalent magnetism at a lower weight while reducing CO2 emissions. This is a technology and advantage that will be difficult to overcome. Amanda also noted Tesla is not the only car company making electric cars. She left it at that...
Perhaps the most important issue discussed by Amanda was the political situation in Malaysia. While I sensed that Amanda seems quite confident in a positive outcome I also know she does not want to be blindsided by a negative decision or perhaps worse, an unclear decision that will provide little or no guidance. Amanda mentioned the politics a couple of times while noting that there were many influential people aware of the vast array of the consequences of a hindered Lynas...
I was a bit surprised to hear that all major projects are in time and while it is true that full commissioning of these projects may take some time (such as admin buildings) the primary function of C&L at Kalgoorlie will make it functionally operatively. Other major projects include updating the LAMP to the new processing configuration, new concrete containing work at Mt. Weld and of course the US venture...
Amanda looked and sounded very confident and I pleased that the forces and vision within the company remained unchanged. Amanda’ obvious pride is evident when she credits the successful efforts of the “teams” in aggregate to the success of Lynas as a company. Amanda proudly stated that she has never seen her people more energized throughout the entire company while noting “record results illustrate all parts of the system are functioning”…
Even though it seems like the yellow flag is out during these difficult economic and political times it is clear that Lynas continues to progress full-speed-ahead with progress on all major projects both on time and on budget. My own conjecture is that I have never seen Amanda so amiable to the prospect of potential growth and for the first time ever she seemed to allude to the possibility of of a downstream manufacturing facility located next to the current planned facility in Texas (US). She is flexing her muscles in the form of $1.12 and given her overall success in planning and executing projects I am inclined to think she is ready to use it…
In any event, this is a good QR showing exactly what an unbridled Lynas can do in terms of production numbers even as complex problems such as water management and tailings disposal are mitigated. Amanda’s well-articulated plan for Malaysian approval/denial clearly illustrates that even the doomsday result will not destroy the company, rather it will make for a bad quarter but it will not be the end of the world. Perhaps we will see global economic improvement soon but one thing is clear, with 1.12B in the bank, Lynas as a company will not only weather this recession, it will be accelerating forward and defining the rules while the competition is learning the game… JMHO…
LYC Price at posting:
$6.84 Sentiment: Buy Disclosure: Held
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