Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Janus Analysis

Equity Bottom-Up

<ul class="">
<li>Insurance against potential Chinese light rare-earths (LREE) embargo</li>
<li>LREEs critical to certain economic sectors, particularly in sensors, actuators and motors</li>
<li>Limited substitution without considerable degradation in efficiency and output</li>
<li>LREEs have geological, geographical and economic quantum of available supply </li>
<li>Longonjo's share LREE characteristics with LYC's Mt Weld deposit, but 1/2 grade</li>
<li>Preliminary cashflow indicates possible EBITDA &gt;US$100m pa using current prices</li>
<li>Key project sensitivities reside around conc. price, grade and met. recoveries</li>
<li>Indicated Resource due late June</li>
<li>PFS due end of September</li>
<li>AIM listing could allow re-rating</li>
<li>Capitalised at 1.3% of <a href="https://www.smartkarma.com/entities/20374" target="_blank" data-smartkarma-citation="entities:20374:1">Lynas Corp Ltd (LYC AU)</a></li>
<li>Recommend: SPECULATIVE BUY</li>
</ul>


Insurance against potential Chinese light rare-earths (LREE) embargo
LREEs critical to certain economic sectors, particularly in sensors, actuators and motors
Limited substitution without considerable degradation in efficiency and output
LREEs have geological, geographical and economic quantum of available supply 
Longonjo's share LREE characteristics with LYC's Mt Weld deposit, but 1/2 grade
Preliminary cashflow indicates possible EBITDA &gt;US$100m pa using current prices
Key project sensitivities reside around conc. price, grade and met. recoveries
Indicated Resource due late June
PFS due end of September
AIM listing could allow re-rating
Capitalised at 1.3% of Lynas Corp Ltd (LYC AU)
Recommend: SPECULATIVE BUY


PM8 – The Perfect Foil to a Xi LREE Embargo

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The last two days have been pretty spectacular for the shares of <a href="https://www.smartkarma.com/entities/20374" target="_blank" data-smartkarma-citation="entities:20374:1">Lynas Corp Ltd (LYC AU)</a>. While it is not clear what has changed OTHER than a heightening of tensions in the trade war, several factors may be to 'blame.'With the blocking of all US hardware and software sales to Huawei after a White House Executive Order on Information Security late last week (temporarily mitigated two days ago by a 90-day temporary general license aimed at easing the transition), the question on everyone's lips was how China would respond. The first response was that China would cease doing business with anyone who ceased doing business with Huawei. That seemed a countermeasure designed to be reciprocal. While Huawei founder Ren Zhengei has made several public statements in Chinese social and state media (many of which appear to be abbreviated for maximum effect - read the details folks!) in recent days, the perception is that Chinese leaders have been quiet. One exception to that was a visit by China President Xi Jinping to rare earth company <a href="https://www.smartkarma.com/entities/28098" target="_blank" data-smartkarma-citation="entities:28098:1">JL Mag Rare-Earth Co Ltd (300748 CH)</a>, in Jiangxi province on Monday. That led to rampant speculation on the share prices of Chinese rare earth companies, and the idea that it was symbolic of what China might do to the US (block rare earth exports). Monday the 20th May saw a pre-market release of a <a href="https://www.asx.com.au/asxpdf/20190520/pdf/4456kg6y8k41tb.pdf" target="_blank">notification</a> of an MOU of a JV between Lynas and US company Blue Line to create a rare earths separation facility in the US. The JV would be majority-owned by Lynas, and would initially concentrate on heavy rare earth (Dysprosium and Terbium) separation but could also include light rare earth (Neodymium, Praseodymium, Lanthanum) separation facilities at a facility on a site currently owned by Blue Line. This strikes me as an obvious thing for which a miner would issue a press release. The two companies already work together, and it promises nothing. It is, however, a project to work on working on a project, and is more designed to elicit interest from other parties to fund it.The 21st May saw Investor Day in Sydney and the stock popped 14.4%, following that by a 7+% move on the 22nd (yesterday) temporarily clearing the highest 3mo moving average seen in the last five years.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/088/694/original/Screenshot%202019-05-24%20at%2012.25.24%20AM.png?1558628765" class="editor-image img-responsive" data-smartkarma-image-id="88694"></figure><div class="content-caption">data source: tradingview.com</div><div class="content-highlight">The question is what has changed and was that change worth a 20+% move in two days?</div>

The last two days have been pretty spectacular for the shares of Lynas Corp Ltd (LYC AU). While it is not clear what has changed OTHER than a heightening of tensions in the trade war, several factors may be to 'blame.'With the blocking of all US hardware and software sales to Huawei after a White House Executive Order on Information Security late last week (temporarily mitigated two days ago by a 90-day temporary general license aimed at easing the transition), the question on everyone's lips was how China would respond. The first response was that China would cease doing business with anyone who ceased doing business with Huawei. That seemed a countermeasure designed to be reciprocal. While Huawei founder Ren Zhengei has made several public statements in Chinese social and state media (many of which appear to be abbreviated for maximum effect - read the details folks!) in recent days, the perception is that Chinese leaders have been quiet. One exception to that was a visit by China President Xi Jinping to rare earth company JL Mag Rare-Earth Co Ltd (300748 CH), in Jiangxi province on Monday. That led to rampant speculation on the share prices of Chinese rare earth companies, and the idea that it was symbolic of what China might do to the US (block rare earth exports). Monday the 20th May saw a pre-market release of a notification of an MOU of a JV between Lynas and US company Blue Line to create a rare earths separation facility in the US. The JV would be majority-owned by Lynas, and would initially concentrate on heavy rare earth (Dysprosium and Terbium) separation but could also include light rare earth (Neodymium, Praseodymium, Lanthanum) separation facilities at a facility on a site currently owned by Blue Line. This strikes me as an obvious thing for which a miner would issue a press release. The two companies already work together, and it promises nothing. It is, however, a project to work on working on a project, and is more designed to elicit interest from other parties to fund it.The 21st May saw Investor Day in Sydney and the stock popped 14.4%, following that by a 7+% move on the 22nd (yesterday) temporarily clearing the highest 3mo moving average seen in the last five years.data source: tradingview.comThe question is what has changed and was that change worth a 20+% move in two days?

China

JL MAG Rare-Earth Co., Ltd. manufactures rare earth materials. The Company produces NdFeB magnet materials and other rare earth products. JL MAG Rare-Earth supplies its products to wind power, new energy vehicles, inverter air conditioners, energy saving elevators, and other fields.

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JL Mag Rare-Earth (300748 CH)

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Travis Lundy

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