Lynas and Mitsubishi

From information on the Internet it appears that Mitsubishi has stock in both Lynas and Molycorp. This is interesting because in a worse case scenario, Mitsubishi may become a problem for Lynas shareholders. I believe it is paramount that everyone in the discussions on Hot Copper join together to determine the market value of Lynas in a favorable economic environment, based on the LAMP, Mt Weld, and the Duncan Deposit. My reason is that Lynas may be a target for a takeover.

Lynas is worth billions of dollars but an incidental investor might not realize this due to the deflated price. Mitsubishi with Morgan Stanley’s assistance has been shorting Lynas in a significant manner. Between June 27, 2014 and October 27, 2014 there were 90 trades done involving 171,321,173 shares with a profit of $13,780,659.70. The first trade cost was $0.1356 per share and the last was $0.072 per share. Now it appears that somebody is again shorting Lynas and driving the stock to .043 per share. Based on .043 per share Lynas has a market value of $144.95 million dollars. The LAMP has a value greater than $600+ million dollars. Share price does not necessarily equate to company value. Why short Lynas when the high once hit $2.70 per share? The upside is worth far more to all of us.

Speculation: Lynas shareholders are being set up for a fire sale. If Mitsubishi bought Lynas it would have control of 67.5 percent of the REE market owning Lynas outright and 35 percent of MolyCorp. Price is less important than possessing a monopoly. Owning both Lynas and MolyCorp gives Mitsubishi supplies inside and outside of China. It also gives Mitsubishi control of REE pricing and product availability outside of China which still harbors dislike for the Japanese due to its World War II invasion of China.

If I’m wrong in my thoughts then determining a fair price for Lynas will be an interesting exercise and if I’m right then at least we, as shareholders, will know what Lynas is worth in dollars not cents as a potential buyout prospect. My rough minimum per share valuation is something north of six dollars per share or approximately 22.2 billion dollars. Look at Mitsubishi’s assets. Twenty-two billion isn’t a major problem for the financial arm of the company.

Our best defense in holding stock in such a non-communicative company as Lynas is to know what the company is worth as a buyout target. I don’t foresee Ms. Lacaze giving us a fair shake. Perhaps she will prove me wrong but till then be prepared.