another lyc thread

I'v read the report several times now and would appreciate the view of other people who have actually read the report and their thoughts on it. At the moment I must admit it is a loose bundle of thougts and I have yet to make a decision. FYI I do hold a significant amount of LYC Shares.

Lets Begin:

Production costs seem to be in line with expectations of approximately $14 - $15. Sale price for the december quarter was avg $21.50 per kg.

During the Quarter 409 tonnes was shipped (presumably to clients) and 741 tonnes was produced. The difference presumably was return of borrowed lanthanum and cerium.

Cash receipts were 6.9million.
(409,000 x $21.50 = $8.8million) so presumably theres 2 million odd cash to be received during the march quarter in relation to december?

Lynas expects to reach 11,000tpa by the June qtr which is by my calculations about 2750tp quarter. Basically the December production fell short by 2,000 tonnes. December production was 27% of the expected phase one production.

On the assumption that we do reach the 11,000 tpa mark how will the cash flows look? Based on the current price
we would expect to receive around $236 million but what would the cost of this production be?

The only guidance seems to be 30% fixed costs 70% Variable costs with both phases of production operational (this seems unlikely at this stage). It is likely the fixed costs of production for only phase 1 are higher than 30%.

Phase 2 ramp up continued during the quarter and it is presumably good to go. However Phase 2 operation is dependent on 'market conditions' and unlikely be fully operational any time soon.

The company burned another 50 million cash during the quarter (most of it on operational, production, and administrative costs) and is left with a relatively precarious balance of 14 million at the end of the quarter. Further we are told that January production levels were similar to the average December qtr production ( I read that to say about 133t produced January. Certainly not an increase that evidences a ramp up to 2750tpq. A rather vague statement about production increase during the March quarter is also given suggesting that March qtr will not be much better. To me it looks like we have cash for March but June is going to be critical unless production ramps up significantly or operating cash is acquired.

Where will the cash come from? Is anyone (sophisticated investor or otherwise likely to participate in a CR for a company that has been dogged by bad luck, bad management, bad investor communication, and a history of missing targets? If I was to give the company any cash I'd want to be number one creditor in case of liquidations (shareholders are last to get a slice of the pie). As such its my view that any cash will come in the form of a loan (secured creditor) or possibly options (someone looking for fast cash) but I think additional shares are less likely due to:
1. Large shareholders will have something to say about that
2. Loan is a much safer alternative.

There is also the question of a potential takeover given the current share price.

So why doesnt the company just ramp up production? Is there issues with the facilities or machinery? Will a fully ramped up stage 1 at current price levels not result in sufficient profit to be worthwhile?

Sorry I only have questions and no answers.