Why did Lynas Corp Climb more than 14% Today?

Lynas Corp [ASX:LYC] traded up 14.6% this morning to a high of 10.2 cents per share.

What happened to the Lynas share price?

This morning, the rare earth miner released their cash flow and quarterly activity report. Sales remained high during the March quarter. In fact, revenues reached a quarter high of $69.3 million.

The revenue high was thanks in combinations to a hike in sales volume and rare earth prices.

Lynas CEO, Amanda Margaret Lacaze wrote:

The record results on all key performance measures for this quarter reflect the strong foundations on which Lynas operates. Lynas is now the second largest NdPr [Neodymium and Praseodymium] producer in the world. With no in-house downstream production, Lynas is the largest supplier of NdPr to the free market.

Lower production, staff and corporate costs saw Lynas increase cash by 36.66% to $52.58 million.

What now for LYC shares?

There are many investors with a bullish view on rare earths. They are the minerals vital for modern tech like your smartphone and high tech magnets. Moving forward in our tech age will only increase the demand for these useful minerals. So, surely having exposure to rare earths is a good thing, right?

It depends on which company. Right now Lynas is a major rare earths producer. If you wanted to speculate on rare earths, Lynas would be a strong option.

But taking a look at their half yearly accounts, an investment in Lynas doesn’t come without its risks. The company currently makes an operation loss of $18.9 million. They have huge borrowings of $477.7 million. Total assets are just enough to cover total liabilities. And their accumulated losses have increase to $1 billion.

It’s probably not the company Buffett would invest in. But you’re not Buffett. So if you are bullish on rare earths, make sure to only invest what you’re willing to lose, because there’s a possibility it might actually happen.


Härje Ronngard,

Junior Analyst, Money Morning

PS: The resource sector likely won’t repeat 2016 and run up another 38% this year. But there are individual resource stocks that could explode in 2017.

Resource expert Jason Stevenson has an impressive track record when it comes to resource stocks. A number of Jason’s active investments in his advisory service, Resource Speculator, are up 52.4%, 57.6% and 100%!

If these are the kinds of returns you’re looking for, you’d do well to cast your eye over Jason’s free report, ‘The Top 10 Australian Mining Stocks for 2017’.

Jason will introduce you to 10 cheap, top-quality Aussie mining stocks that look set to soar this year.

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Harje Ronngard is a Junior Analyst at Markets and Money. With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation. It’s not good enough to be right on average when it comes to investing. The market is volatile and it only takes one bad day to ruin your portfolio. You don’t want to end up like the six foot man that drowned in the river that was five foot deep on average. It’s why Harje is constantly reminding investors of their downside risk here at Markets and Money. He does so by simply asking just two questions.  What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Markets and Money readers. Right now Harje is focused on managing research and investments over at the Legacy Portfolio. An investment publication designed to significantly grow investor’s wealth over time with deeply undervalued businesses. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home amongst Matt’s high yielding income plays.

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