LYC: rare earth minerals the next big thing

[xman]

hi cantab, could you please shed some lights on where to find the historical Rare Earth price chart? thanks. xman

[xman]

thanks cantab. it helps.

[moe]

you would think that they will soon be asked for a "please explain". All good though cantab.

[thereslifeafter87]

Interesting company.

I have had a quick look.

At 33c, they have a fully diluted market cap of about $100mill.

I can see revenue of approximately $82mill in the first year of full operation. I reach this number like this:

121,000 tpa of ore at 14.8% REO = 17,908 tonnes REO (numbers from latest presentation)

17,908tpa x US$4,960 = $88.82mill
($4.96/kg for the basket of rare earth minerals).

So, the value of what's coming out of the processor is about AU$119.32mill (at an exchange rate of 1.343)

However the presentation says only 10,500tpa of rare earth, so there must be some wasteage. If that is the case, the value of the product is AU$64.87mill.

How much value is added in the further downstream phases?

The feasibility study shows operating costs of $43mill first year (predicted revenue of $48mill less NPAT of $5mill), $56mill second year, ramping up to $71mill in year 5.

At their expected top production of 15,000tpa, this gives them revenue of $74,400,000 at todays prices. Assuming this is at year 3 operating costs, we are left with NPAT of $13mill.

This is five years away from achievement at LEAST.

So, in buying LYC you are effectively paying $100million for a possible $13million in five years time.

Thats a future pe of 7.7x. Five YEARS in the future, and they have not even secured financing yet.

The feasibility study doesn't seem to state the capex required to get the mine into production, but I would assume at least $40million.

at 50% debt/equity financing, thats another $20mill on the market cap - so $120mill.

So we have a 2011 foward PE of 9x.

This stock is horrendously overpriced. Sorry guys.

Even if rare earth materials increase in price by 50% from here, I would still say it's marginal.

[roget]

I am particularly glad the debt with Ashton has been rescheduled. The amount wasn't even shown in their balance sheet (other than a note). LYC does have a lot of shares on issue and is very focused on one range of minerals albeit one whose value is predicted to increase. The management the thing I like about LYC, especially their experience in China. I don't hold LYC atm and considering its value (market cap) would need more good announcements re REE prices and when LYC starts to get revenue in the short term. Good Luck to all holders but I think there is better value elsewhere.

[roget]

I switched to ARU as it also has REE but a host of other minerals as well. I also liked its market cap as compared to its price better. LYC has the better REE assets though but for overall investment ARU looked better. Time will tell as their is a little bit of disquiet over some of ARU's mangaments decisions of late and as I said previously I like LYC's management.

[slam]

Hi All
Behre Dolbear Australia Complete Independent Tech. Review

http://www.asx.com.au/asx/statistics...issuerCode=LYC

Interesting Reading

Cheers
Slam

[roget]

Hi Slam, I have read the Behre Dolbear Australia Complete Independent Tech. Review and don't like the fact that it is a desk top review only. Which to my understanding means no on site inspections of logistical enquiries.

[Bobco]

And their valuation is 61, makes 'em pretty cheap atm.
bobco-holder

[moe]

Will be interesting to see how well they stick with the timetable. Still a lot of water to go under the bridge before first sales.