LYC - a takeover theory, page-3

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doudou

8,231 Posts.

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18/08/17

08:35

Post #: 26580810
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Originally posted by mmoore1957 ↑

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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i think this has always been the case for LYC but what is making it more likely is that while the bond/warrant issue is playing out the RE prices are gaining while the shareprice is being held back & making an opportune bid much more likely, as leaving it to long means paying a much higher price to SH's not just bond holders ?
the fact that the bond/warrant holders are able to lock in nice stag profits on conversion is telling us just that.

LYC Price at posting: 14.5¢ Sentiment: Buy Disclosure: Held
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(20min delay)
Last $7.89		Change -0.130(1.62%)		Mkt cap ! $7.379B

Open	High	Low	Value	Volume
$7.97	$8.02	$7.86	$13.87M	1.750M

Buyers (Bids)

No.	Vol.	Price($)
39	14041	$7.88

Sellers (Offers)

Price($)	Vol.	No.
$7.90	11747	30

View Market Depth

No.	Vol.	Price($)
11	2919	7.870
28	10375	7.860
18	26997	7.850
11	18740	7.840
11	19388	7.830

Price($)	Vol.	No.
7.880	12530	42
7.890	10204	18
7.900	16015	19
7.910	23345	13
7.920	8895	10

Last trade - 14.24pm 01/10/2024 (20 minute delay)

LYC (ASX) Chart

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