Lynas Corporation Shares Struggle to Mend from 22.4% Decline

Lynas Corporation Ltd’s [ASX:LYC] share price is just keeping afloat after yesterday’s disastrous crash, as it fell as much as 22.4% to $1.64 apiece by close yesterday. At time of writing, the current price is $1.67, having risen by 1.82% this morning.

Lynas Corporation is an Australian-owned rare earths company with two significant operations: a Mount Weld mine in Western Australia, as well as a refining facility based in Malaysia.

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Investors hit hard after Malaysia hits the pause button

Investors reacted poorly to the news that operations in Malaysia could only continue so long as certain new conditions were met, including the specific removal of excess radioactive waste from the Kuantan site.

In a statement made on Wednesday (5 December), a spokesperson for Lynas said they were weighing their legal options after the government’s amendment to the conditions could potentially affect their ability to operate. Their licence is set to be renewed in September 2019.

In their same statement, the company also confirmed that their operations were deemed to be low risk and compliant with local laws, according to the latest review, making the decision even more of a surprise.

This appears to be policy based on politics, not policy based on science,’ said Amanda Lacaze, Lynas MD & CEO.

However, we are confident we are well placed to manage potential chances and our long term investment thesis remains strong.’

What does Lynas’ investment future look like?

While the share price bounced back today, it does remain to be seen whether Lynas will have bigger problems implementing their plans in the long-term. There have been protests from locals and Malaysian MPs against the construction of the plant amid concerns about the environment impact.

Aside from the condition to remove radioactive waste, in order to have their licence renewed, Lynas will have to outline an action plan for the complete disposal of all non-radioactive waste.

In the meantime, Lynas may have to weather further political turmoil in Malaysia before they have a clear picture of the government’s final decision.


Jason Stevenson,
Resources Analyst, Money Morning

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Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:

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