Lets put the past behind us and look at Lynas with a fresh set...

Lets put the past behind us and look at Lynas with a fresh set of eyes, for the share price is a reflection of future expectations and not the past.

Lynas has a finished mining and processing operation, with final product expected to be announced any day now. However since the company set out on this journey the facts have changed considerably.

As we stand today it is still not proven that the company can generate commercially viable product and still meet waste/residue demands of the Malaysian government. Given this Lynas has restrictions and hurdles placed on it like no other global competitor, Chinese or otherwise. This means that on a like for like basis Lynas cannot be as competitive as the rest of the industry and therefore margins into perpetuity will be lower. Which means the share price into perpetuity will be lower than originally expected.

Looking at valuation based on current long term rare earth price estimates the general assumption for Lynas from institutional analysts is approx 80c per share. However these estimates are before reducing company margin estimates to account for the cost of diluting and exporting waste/residue from Malaysia. Hence one could argue that these estimates are too high because as the Malaysian government has stated time and time again these new export procedures will have to occur.

So today we have a company worth approx 80c per share at best base on current fundamentals, before accounting for the additional costs associated with meeting Malaysian government controls. At the same time the probability of the company not being able to meet these requirements is still high and one could argue that the chance of either these too restrictive government controls or some other left field event preventing operations is likely around a 25% probability (in recent history it has been 100% because the company is still not in operation). In such an event the share price is effectively worth zero, given a rare earths mine without a processing plant is basically worthless in today's Chinese controlled market.

To summarize the current company valuation:

Probability Lamp is commercially viable 75% * 80c valuation = 60c
Probability Lamp is not commercially viable 25% * 0c valuation = 0c
Total probability adjusted valuation = 60c

To summarize despite what a lot of people may say things have indeed changed for this company and the industry as a whole. In this instance the market does not lie, because at current share prices the stock is at best trading at fair value.