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Lynas Conference Call
Lynas hosted a conference call recently that can be accessed by clicking on: Investor Call - 5 May 2009
The company line was that the new Chinese investors want to fund the company’s existing business plan and management without any changes. They understand the strategic value of REEs and wish to maximize the company’s value just as any investor would. Two good features of the deal are, first, that the new funds are believed to be sufficient to get the company past its Phase 2 goal of producing 20.5K tonnes of REE, and, second, that if the deal is not approved by shareholders and/or government authorities the deal provides for a breakup fee to the company sufficient to fund it through a period of further fund raising.
That said, the central fact remains that the Chinese will own 51+% of the company. They will control 4 of 8 board seats. The tie-breaking vote will be held by the current Executive Chairman. And most importantly if he steps down for any reason it seems clear that the Chinese would be able to name his successor. So there we have it. In the end, it seems clear, the Chinese will dominate and control Lynas.
In the meantime the company intends to continue to hold quarterly conference calls. It welcomes direct questions via telephone. And investors who wish to ask a question via email can do so at general [Email address: general #AT# lynascorp.com - replace #AT# with @ ]. The company’s web site is also a trove of information.
Tags: peak oil investments
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8 responses so far ↓
1 Jimp // May 15, 2009 at 3:15 am
http://seekingalpha.com/article/137855-molycorp-ceo-why-rare-earth-metals-matter
Another recent article supporting rare earths metals. Any further thoughts?
2 Jim Kingsdale // May 15, 2009 at 7:43 am
Jimp: this interview with the Pres. of Molycorp is very useful for understanding the key demands for REEs as well as the system by which the end products are related to the ore in the ground.
It sounds like responsible people are pushing the U.S. govt. to make REEs part of our strategic reserves.
The bottom line is that it all seems extremely bullish for REE demand and valuations.
3 Isaac // May 15, 2009 at 7:45 pm
Nice description of the global REE industry from Molycorp-
http://www.molycorp.com/globaloutlook.asp
4 Jimp // May 16, 2009 at 7:35 am
“Without production from either Mount Weld or Mountain Pass, shortages are likely to become severe as demand continues to grow with the further development of Green Energy and Rare Earth Dependant Technologies and significant volumes of Nd may not be available outside of China, at any price. ” - It’s great that Moly corp mentions Lynas corps Mount Welds deposits as absolutely crucial.
Puzzling to me is that if rare earths are so important/crucial, why isn’t Moly corp mining its very own large deposits (mountain pass) of rare earths right now?? Currently, is it due to Chinas “tight price control” over the rare earth market that precludes Moly corp from mining? Does it appear that in the near future that demand may be at the “breaking point,” where China can no longer control the rare earth market due to excessive demand? Allowing Moly corp to fully develop mountain pass?
From an investment point of view, what are the negatives of Lynas Corp being partially owned by the Chinese?
Would you buy Moly corp when/if it goes public (IPO)?
5 Jim Kingsdale // May 16, 2009 at 9:36 am
Jimp: I’m not sure your questions about Moly’s strategy can be answered without having some inside information regarding permitting, global REE inventories, Moly’s finances, etc. But Molycorp seem like very canny operators and investors. I’d be inclined to own their stock but of course would want to read the prospectus first and see how it is priced. It sounds like they see a growing investor awareness in REEs and are waiting for existing stocks to become more richly priced before letting others in on their game.
Meanwhile, read F.S. reminds us to bear in mnd another broad overview of REE world that was posted a few months back at Seeking Alpha:
http://seekingalpha.com/article/103972-rare-earth-metals-not-so-rare-but-valuable
6 Jim Kingsdale // May 16, 2009 at 9:37 am
That would be “reader F.S.”
7 Steve // May 16, 2009 at 9:46 am
I’m amazed that with the importance of REEs, no other government has stepped in to keep Lynas out of the control of the Chinese. Their control of worldwide REEs is well known - is the rest of the world dropping the ball or are we held back by our ‘free market’ philosophy while the cash-rich government led Chinese scoop up all the world’s crucial resources?
8 Jim Kingsdale // May 16, 2009 at 10:03 am
Steve - I made the same comment a while ago. Somehow it seems like the entire OECD is asleep at the switch on REEs.
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