LYC Overview...

A couple of new investors indicated that they are a bit confused with the product, processes and the political implications that surround Lynas as an investment. I sat down and tried to make things a bit clearer for new and potential shareholders. While the major steps can be simplified on paper the actual operation is complex with many moving parts including synchronization of the entire system…

With most large scale critical minerals operations, the process starts with mining of raw ore. Lynas owns 100% of a mine with one of the richest RE deposits in the world. The mine at Mt. Weld (Oz) is a tremendous asset for Lynas yet it garners little attention. It has both quality and longevity which seems to increase with every drilling campaign with sustainability looking well into the future…

At Mt. Weld the mined ore is preprocessed to an even more concentrated ore, sent by rail to Fremantle (on the ocean) where it is shipped (by water) to Malaysia for separation. Cracking and leaching (C&L) is a front end process that must occur with all RE separation and it cannot be avoided. It is an industrial process and while it is not the glamorous end of the process anyone who will be separating RE’s must build a large kiln or have an equivalent method to perform C&L at scale…

The LAMP (Lynas Advanced Material Processing) in Malaysia is where at the present, all incoming ore is put through the C&L process. The mineralization of RE’s is such that all of the individual 17 elements are found together. The SX (solvent extraction) process utilizes an aqueous (water) solution and multiple trains (or steps) where the individual elements are separated, dried, bagged and shipped. Of course, in actuality there are many moving parts in the Malaysian operation and the key is the synchronization of all processes to allow for maximum throughput while maintaining quality…

Politically, a warrantless campaign using the catch word “radioactivity” was initiated against Lynas causing much angst for the company over the years. While many long term posters know the details here it can suffice to say that these political issues are being put behind us…

These are some the areas where Lynas excels including the Kalgoorlie C&L facility coming on line in short order. It seems like virtually no-one has realized that pushing bags of processed RE’s out the door requires ore, that has been through the cracking and leaching process, coming through the front door. There is no viable shortcut to C&L, and there are few known kiln projects the size of Kalgoorlie under construction. Lynas is finishing the heavy lifting in Kal and the company will be in the right place at the right time with the massive kiln at a C&L facility which is operating close to the mine…

Another intriguing piece of this investment puzzle is the US venture which I am sure will be a cloak and dagger operation if the US has anything to do with it. It has been pointed out by a few people that little is heard from either side on progress or much else. I have been reading that the US government is in a panic over the availability of the heavy rare earths (SEG or Samarium, Europium, Gadolinium - all heavy RE elements). It wouldn’t surprise me if perhaps progress is a bit further along than we realize, but this is speculation on my part…

Also it is worth noting that Lynas, with Amanda at the helm will capitalize on any opportunities that may happen to arise. A good example is re-engineering the LAMP to take advantage of the C&L relocation to Kalgoorlie. Apparently the folks at the LAMP have figured out how to increase RE throughput after C&L is gone. Amanda mentioned it and I barely caught it in the last call. It will be interesting to watch this develop...

I hope this helps as far as a quick analysis, looking forward there are multiple dimensions to this company with new projects and processes being developed all of the time. My own feeling is that recently Lynas has been growing, unbridled by an aggressive business plan and virtually no financial concerns which includes additional financial support from JARE (a Japanese investment consortium). The wisdom and success of Amanda’s decisions are beginning to emerge and with a little bit of help from the world economy we just may see a valuation commensurate with the the share price... JMHO…