The market timing gods are obviously watching Amanda and once again a fantastic report is met with a tanking global market. As I watch the Lynas/Oz share price drop I am reminded about just how much the US markets can minimize a great company globally, a report that might otherwise do wonders for the company’s share price…
To start it all Amanda referred to the report as a “blinder” assuring us yanks that this is an Australian term for a knock out game in the Australian football league? Once again Amanda laid out some of the many positives that shaped the quarter in what appears to be a binder and what a quarter it was. It seems that we are hitting on a twelve cylinders and while the numbers speak for themselves a couple of numbers stand out. Exploration is a necessary expense but represent $40m this quarter and the fuzzy hangover still lingers with $20m paid this quarter for “extinguishment of rehabilitation liability”…
Mt. Weld is quite simply amazing. Here are the first words from three separate paragraphs of the report describing Mt Weld. Rare Earth Element (REE) mineralisation was confirmed…, The weathering process has significantly enriched the REE grade… and All samples returned REE assay; the highest grade is 21.44% REO. All of these phrases point to the developing story at Mt. Weld and IMO were Mt. Weld to be an independent company it would be a rare earth sensation on its own rather than a tremendous understated asset for Lynas and the foundation of the Lynas future….
It sounds like Kalgoorlie is on track and on time with Amanda acknowledging that most of the long lead time equipment is on site and in the process of assembly. The scale of Kalgoorlie is stunning as seen in the pictures and looking at the size and weight of the kiln itself it puts rare earth processing in perspective. Look at it this way, one kilo of rare earths at the exit door at the LAMP in Kuantan physically weighs much less than the rare earth ore that went in the door. To produce rare earths, in scale one must physically put significant amounts of ore at the front end of the process to physically extract the final product…
There is no shortcut where one can magically put in 1kg of ore and output 2kg of rare earths although some Lynas pundits will tell you that MP has developed such a process. The pictures of the new kiln indicate that continuously processing massive amounts of concentrated ore treated with acid in a kiln where the temperature is nearly 1000C is no small feat. Cracking and leaching at Kalgoorlie represents a realistic way to put volumes of ore through what is currently a bottleneck in the process and supply enough rare earths concentrate for the LAMP and hopefully much more…
I found Pol who is VP of downstream to be most interesting today. His take on Europe is that the energy crisis will be beneficial for Lynas in that significant amounts of large off shore wind projects will consume considerable amounts of Nd/Pr. I have never heard Pol be so positive about future market demand for rare earths and at one point he commented about Lynas in the rare earth market, “We are the lucky ones, demand is increasing very fast”…
My impression is that Amanda is aggressively preparing Lynas for growth and it shows on many fronts. A good example was the recent announcement that JARE has reaffirmed the availability of a loan facility should the need arise. In listening to Amanda today I came away with the impression that she once again has vision and is putting gas in the tank should an opportunity arise. Interestingly, when Amanda was questioned about Lynas becoming a magnet maker she didn’t rule it out. I think there are many other easier ways to grow and Amanda is not one to over extend. At this point it would appear that Lynas is perfectly balanced in terms of product demand and future demand growth…
The share price of Lynas may have tanked thanks to a sour world market but the condition and future of Lynas as a company has never been brighter. Lynas is poised to solve the upcoming world problem of rare earth supply and with Amanda at the helm it would appear that growth is a big part of the equation. The story at Lynas continues to be strong and is getting stronger…. JHMO…
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