Even after Lynas has now been given the full support of the Malaysian Government and the AELB by the issuing of the operating licence the shorters are still trying to create doubt in the minds of potential investors and existing share holders .
As we all know the Lynas LAMP has been put under the microscope in terms of evaluating its safety levels and it has passed all the tests. The specialists in the Rare Earths industry have said publicly it is the most safest and state of the art plant in the Rare Earths industry and will be the leading manufacturer outside of China. After waiting since Feb. 2 for the final go ahead on the TOL on the 5th Sep, we are now only a few months away from production and then delivery of orders to reaching first cash flow and profits.
These shorters are still trying to create doubt as they have formed a habit when trading Lynas and have become very comfortable in making profits when the SP has been going down mainly due to the delay in issuing the TOL. It appears during trade on Fri. 7th Sep. there was strong support at the 0.81 level and the shorters were doing their best to break through this level. From my research various fund managers will have changed their view on Lynas since they have now been issued the TOL and will be more likely to be going LONG on the SP rather than short as this was the major obstacle/threat to the Lynas business. The more support at 0.81 the better as eventually the shorters will give up and go long and this is when you will see the SP move up sharply.
The real big move will happen when production starts and profits start to flow and the majority of the business has been de-risked, this will be around April / May 2013. If the shorters do in fact get there way and the SP moves back down towards 0.60 do not panic as this is just another buying opportunity for those who have cash available.
I also now believe with the issuance of the TOL there will now be more positive announcements from Lynas in the not too distant future in the way of new customer supply agreements etc. which will further de-risk the stock making short selling less effective.
I also think that the price of RE’s will rebound, obviously there is still market movement’s in the price of various rare earths, however according to my research the demand for RE’s will pick up during coming years.
THE ROCKET is just refuelling and getting ready for relaunch!!!!
For people who are not aware of what Short Selling is , here is some information.
In finance, short selling (also known as shorting or going short) is the practice of selling borrowed securities or other financial instruments, with the intention of subsequently repurchasing them ("covering") at a lower price. In the event of an interim price decline, the short seller will profit, since the cost of repurchase will be less than the proceeds received upon the initial (short) sale. Conversely, the short seller will incur a loss in the event that the price of a shorted instrument should rise prior to repurchase. The potential loss on a short sale is theoretically unlimited in the event of an unlimited rise in the price of the instrument, however in practice the short seller will be required to post margin or collateral to cover losses, and any inability to do so on a timely basis would cause its broker or counterparty to liquidate the position. In some cases, the short seller must pay a fee to borrow securities and must additionally reimburse the lender for cash returns the lender would have received had the securities not been loaned out. Mathematically, the return from a short position is equivalent to that of owning (being "long") a negative amount of the instrument.
LYC Price at posting:
82.0¢ Sentiment: LT Buy Disclosure: Held
(20min delay)