I think this needs to be seen and read to be believed
Who is right and who is wrong
You be the judge
Two articles that may have been seen by most holders of Lynas Corporation
Deutsche Bank downgrades Lynas Posted on July 18, 2013 by Asher Berube July 18, 2013 (Source: The Australian) — Rare-Earths miner Lynas is facing sales uncertainty and possible capital issues, forcing Deutsche Bank to change its recommendation on the stock to a sell.
In an analysis of the rare-earths market, the investment banks’ resources team said the miner was preparing to bring supply into the market just as global economic activity was slowing.
Deutsche analyst Chris Terry said Lynas and Colorado-based Molycorp expected to have 40,000 tonnes of annual capacity available by 2014, greatly increasing supply in a global market that was currently about 110,000 tonnes per annum.
He said the 2011 prices had evaporated with global economic uncertainty, adding that current prices were the “new reality”.
“After a rollercoaster ride over the last three years, global economic uncertainty, demand destruction and destocking have brought rare-earth element prices in 2013 back to levels many thought would not be seen again,” Terry said.
China dominates the global rare-earths market, accounting for nearly 90 per cent of supply and 70 per cent of demand.
After rising up to 650 per cent in the first seven months of 2011, after China cut its export quotas, rare-earth prices have continued to slide to return to pre-crisis levels. Lynas outlined last month that with spot rare-earth prices of $US16-$US20 a kilogram - 25 per cent below the minimal sustainable level - it would implement a “minimum price schedule” from July 1 and persuade customers to pay higher than market prices because of the benefits of contracts that guaranteed supply.
Shares in Lynas yesterday closed 6.9 per cent lower at 40c. The company’s Malaysian processing plant is working at its first-stage capacity of 11,000 tonnes per annum. But given the weak pricing, the second phase aimed at taking it to 22,000 tonnes has been delayed.
“We believe Lynas is in a tough position with sales uncertainty and possible capital issues while it waits for a market recovery,” Terry said.
He was concerned about Lynas’s ability to repay of one of its debt facilities and said there was a “risk that Lynas will need to restructure its balance sheet over the coming 12-24 months”.
Lynas – JPM calls it ridiculously cheap…and rates it as BUY July 15, 2013 by James Gerrish Leave a Comment Lynas Corp (LYC) has been a stock under pressure for some time now and finds itself trading around 45c ….It all started with the political/environmental issues around its operating plant in Malaysia and is now being hindered by a sharp drop in Rare Earth prices.
JP Morgan provided an update on the stock last week and it’s actually the first optimistic (sort of) view I’ve read on the company in a while.
They upgraded the stock to Buy from Neutral with a target price of $0.60 (was $0.65). It seems the broker is feeling a bit more optimistic on the rare earth market despite admitting some of it is in oversupply. They suggest a surplus is largely in cerium, while other elements like Neodymium-Praseodymium appear structurally short. This is good news for Lynas.
They say there is certainly risks given the valuation is dependent on higher prices and it may get to the point the balance sheet needs some topping up, but the stock is now ridiculously cheap – according to JPM.
Combined with more confidence in the rare earths market, the stock is upgraded to Buy
LYC Price at posting:
43.5¢ Sentiment: ST Buy Disclosure: Held
(20min delay)