If I understand correctly the current panic selling is caused by two issues: (1) generation of sufficient cash-flow by sales to meet operating and administration expenses as well as to serve interest and debt repayment of the Sojitz facility: (2) mid- to long-term profitability of Lynas business based on RE prices and production rate. Current frenzy has been caused by the half-year accounts released where auditors have chosen to ask the company to insert a going concern caution comment based on cash-flow demand.
WIth regard to the cash-flow issue, especially the debt servicing of Sojitz, the annual report (in no 23) lists the repayment dates. For the next 12 months from now, apart from the USD 10m they already repaid in Jan, there is a 35m USD repayment on 30 September 2014 and a 45m USD repayment on 31st March 2015. THat's it, we are talking about 80m USD additional cash generation from sales in the next 12 months from now.
If the production were increased to a run rate of say 2500t per quarter starting from 1st July quarter and assuming a basket price of 25 USD as announced in last Activities report, cash of approx. 62m USD would be generated for every quarter. Assuming cost of 40m USD this would leave cash of 20m USD being left to service debt, which amounts to 80m over a 12 months period (while at the same time being profit to the extent of not being non-cash effective depreciation). That means, the cash-flow demand would be tiny (maybe in the amount of 20-30m) if at all.
It all depends on Lynas being able to deliver on their ramp-up statement of an average 11kt run rate starting from the June quarter. If that happens, everything will be sustainable.
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Last
$6.76 |
Change
0.020(0.30%) |
Mkt cap ! $6.318B |
Open | High | Low | Value | Volume |
$6.76 | $6.81 | $6.72 | $16.83M | 2.487M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 9162 | $6.75 |
Sellers (Offers)
Price($) | Vol. | No. |
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$6.78 | 5455 | 1 |
View Market Depth
No. | Vol. | Price($) |
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2 | 9162 | 6.750 |
3 | 12457 | 6.740 |
3 | 24866 | 6.730 |
2 | 12506 | 6.720 |
1 | 8339 | 6.710 |
Price($) | Vol. | No. |
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6.780 | 5455 | 1 |
6.790 | 3572 | 3 |
6.800 | 13019 | 4 |
6.810 | 171169 | 7 |
6.820 | 17057 | 3 |
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