I have come to grief a number of times by investing in companies which had everything in place; a good and safe resource, a production facility being built by specialists in their field; their s.p. hovering in pretty hopeful territory just in the years before coming into production - then a long and bumpy ride up - not even a ride to about the $4 - $5 mark and down again, because of various unexpected events. Yes, they are producers now (not Rare Earths though, which I think might prove the exception); but events around the globe had a significant impact on their s.p. I am not going to mention names here, since this is a Lynas thread.
As for Lynas - everything looks good on paper, with a number of provisos: Yes, they're serious about becoming a producer; yes, Lynas have a huge raw materials base and the finance and yes, yes and yes they actually received good marks from the IAEA. The provisos in my view are: the political situation in Malaysia - who is to say that we are not going to get a similar 'revolution' happening there as we have seen in the Middle East? People are getting educated and stimulated to want more from their regressive governments, particularly in Muslim countries. Malaysia is relatively stable, but there is still a sovereign risk, IMO. Governments make laws. Relatively dictatorial governments often get away with murder (as history proves) - they are certainly fond of acquiring wealth which isn't theirs.
Lynas' problem now will be to get their production facility ready in time to cash in on their first mover advantage and meeting the conditions imposed by the IAEA. This will take just a little extra time - how much, we don't know.
If they were Asian or German, I'd say, put your money on it that they'll be on time, being Aussies, I'm not so sure - sorry. Just the fact that N.C. could take his eyes off the long-term goal of becoming a producer with his aborted (thankyou nursery et all) brinkmanship episode with FRG makes me say this. In the meantime not a squeak out of any of the co-directors; has anyone heard of Ziggy commenting just once on the high 'radioactivity' accusation, for example? - it would have been easy to do and good PR for investor confidence.
Once Lynas are producing, all the other goodies will come into play; take-off contracts, Mitsubishi, co-production with Siemens (and that could be the real biggy) - yes, the future does look bright.
BUT the world is an uncertain place - more uncertain than ever and I just like to add a note of caution to the unbridled enthusiasm amongst Lynas HC posters - just check the thumbs-up count on any positive (some might call it 'ramping') post.
I would have preferred Lynas to be producing in Australia, maybe slower, but safer and good for our nation.
I am an investor because I also believe that Rare Earths are a much needed resource to enable us to live sustainably on this earth - and have fun into the bargain - but I also do not want to read page after page of; 'when are our collective birthdays going to happen - all at once - and on which Sunday - and what are the gifts going to be'.
I do not enjoy being controversial, I'd just like you all to keep a little bit of a cool head. I promise, I'll gladly eat humble pie at those $4 - $6 - and $10 parties; well a good red'll do! I actually believe if Lynas gets to be a producer the s.p. will rival anything the big miners can offer. But my disclaimer is the word 'believe'.
I certainly think at around $2.00 the share price is low, and from what I gather (and what you say, bythebay) it represents less than the net worth of Lynas as it stands - the resource alone could be an absolute prize - so I believe my small investment to be safe.
So this is my rant and ramp for the day.
Happy Sunday all Taurisk
LYC Price at posting:
$2.01 Sentiment: Hold Disclosure: Held
(20min delay)