LYC 0.49% $6.13 lynas rare earths limited

LYC - a takeover theory

  1. 908 Posts.
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    I've been thinking about LYC and a potential takeover and it seems to me that LYC is in a very vulnerable position at the moment. Before I explain why some background.
    1. China controls > 90% REE market
    2. The world has woken up to the fact that REEs are a strategic element and are critical for our future technological world. No REEs no F35s. No REs no modern military weapons. No REEs no communication devices. No REEs no EVs. No REEs no wind turbines. Etc.
    3. While the world appreciates all the good work China has done in developing REE sources & products ,the USA, Japan, South Korea, Europe, etc will simply not want this current situation to prevail. They will want significant Non Chinese ("ROW") REE sources available.
    4. Enter LYC as the only ROW supplier of REEs.
    5. LYC has fined tuned the operating & product performance of its business and is operating at about breakeven before the current NdPr price increases are factored in.
    6. NdPr prices have increased significantly recently, driven by reduced supply and increased demand. The barriers to entry in the REE market are very high in terms of time & cost, so it is unlikely we will see significant new supply within the next 5 yrs. Hence NdPr prices are likely to establish a new higher base.
    7. I computed a NPV for LYC incorporating only the current NdPr increases (My thread dated 14/8/17). The number is A$0.53. It is a substantial premium to the current SP of A$0.15
    8. Mt Kellett still have about 2.3b shares to sell after full conversion. Their market actions are depressing the SP and preventing it from moving to a level reflective of the true economic value of LYC.

    So we have a company in LYC which has substantial STRATEGIC VALUE and ECONOMIC VALUE, neither of which are reflected in the current share price.
    Somewhere in the ROW, the situation in which LYC is currently in will be being watched very carefully. They will realise that:
    1. LYC is of significant STRATEGIC importance
    2. LYC is currently very cheap.
    3. There are about 2.3b shares available at around 11.25-13.5 cps.

    Hence now is the perfect time for someone to consider a play for LYC. Rarely do you have the stars so perfectly aligned as they currently are in a potential takeover target. There will be ASX technical issues with a takeover of LYC but good advisors can plot a course through.

    There you have it. It may be all early morning fantasy BUT LYC is a significant strategic asset and someone (or more than one!) may decide now is the perfect time to strike!
 
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Last
$6.13
Change
-0.030(0.49%)
Mkt cap ! $5.729B
Open High Low Value Volume
$6.16 $6.20 $6.10 $18.66M 3.037M

Buyers (Bids)

No. Vol. Price($)
2 16114 $6.13
 

Sellers (Offers)

Price($) Vol. No.
$6.14 24774 3
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Last trade - 16.10pm 02/07/2024 (20 minute delay) ?
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