clsa - really?

Malaysia-based rare earths processing plant will likely set back the project at least
6-12 months and harm its economics, says CLSA analyst Michael Evans. "The start-up
was always pretty ambitious for the third quarter of this year and I'd be very
surprised if this news doesn't delay that. You would have to think it's going
to be a minimum of six months' delay and probably 12 months." Lynas has already
mined its first ore but Malaysia's government will interdict shipments until the
company has responded to 10 issues raised in a report by the International Atomic Energy
Agency. Requirements that Lynas submit a plan for disposing of waste after the project is
decommissioned and make provision for a remediation fund are likely to be the biggest
hurdles to start-up: "The project should generate substantial cash margins even if
rare earth prices come down a lot, but the provisions may affect the economics of
it," says Evans.