why lyc is $2 and not $4

For those interested in the RE market, a comprehensive report has been released on future supply scenarios.

http://www.criticalrareearthsreport.com/

Whilst many of the projections are debatable, one thing that was quite clear to me was the supply differences in the 'optimistic' and 'pessimistic' scenarios.

One had LYC producing in 2012, and the other had production starting in late 2013/2014.

imo the key reason that Lynas is trading at $2 and not $4 is concern about startup dates.

Given the current supply deficit, the production margins will be much higher (5x?) in 2012 than 2015.

This being the case, 1kg of TREO production in 2012, will be as profitable as 5kg TREO produced in 2015.

The mission for Lynas is simple. Produce ASAP and the market will recognise the value being created.

Key milestones along the way are:-

Apply for pre-operating license (mid August??)
Granting of license (up to 90 days from application?)
First feed to kiln (Dec 2011)

Each of these milestones (if achieved) will be a catalyst for a significant rerating.