lyc & re price sensitivity analysis, page-6

Firstly just like to point out that the net finance cost in the assumption is in a per month basis, hence over a whole year why there is the gap 12 times bigger to that value.

Now Holygrail i have 2 main reasons why i think it will reach high $30/kg, and one reason for it to go even further.

The two first reasons are:
1.Pollution in China, pretty much out of control at the moment, i think its a lot more serious than a lot of people think. It is silly for China to sell an asset so cheap when it has severe environmental effects, which i doubt they manage anywhere close to the level that Lynas does. Easy way to stop this is for China to bring in a tax to increase the cost of production. The WTO already are starting to step in.

2.The crack down on illegal mines. So obviously China will want to sell at a higher price. This has always been in their interests and the crack down on illegal mines should reduce the supply significantly.

My main reason though is all about the big picture. The RE metals market is definitely a high growth industry. Think about the main products that use RE metals. Wind turbines, electric cars to name a few. Both of these have been in the media lately about significant increases in demand. I think the RE metals market has a significant upside, and Lynas is probably one of the best positioned companies to take advantage of this.

The RE market is starting to create some hype, and if someone wanted to invest in this industry, LYC would be a great source of exposure.