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LYC $2.25

Highest bidder situation

  1. Jim B

    195 Posts.
    85
    Imho makes a point, “… Lynas is worth what the highest bidder is willing to pay for it.” Assume the highest bidder would offer the share price valuation of $0.046 per share, what should the board do if the scrape value of the LAMP is say $0.16 per share?

    As no company or country appears to have placed any value on the strategic needs of the free world for REEs, scraping the LAMP should be done if it gives shareholders the best return. That doing so may limit competition, impact strategic security, raise prices with a one major player market (China) and make companies who put price ahead of all else totally dependent on China should be of no consequence to Lynas. In this instance, forsaking all for the bottom line may have major consequences for businesses.

    Corporations who do not step up to help Lynas now do themselves an injustice. Under normal circumstances other companies compete based on quality and price. But if Lynas folds where will corporations go for REEs? MolyCorp is working through problems like Lynas and its production is low while China has its own issues. So where do the companies who balked at helping Lynas go? The industry has admitted there will be shortages through at least 2020.

    If Lynas and Molycorp have had so much trouble getting “it right’, what bank or banks would be willing to fund a third try? Maybe China but ask Hong Kong how it likes being a partner with the mainland.

    I’ll admit I have little regard for MBA types. It’s not all about the bottom line. Going with the lowest bidder for the purpose of feeding the bottom line in the short run is questionable. If Lynas was to go bankrupt in the process what will be the next great MBA concept? It takes years and billions of dollars to build another plant and the customers won’t wait. Just like companies, their customers have little loyalty.

    So scraping the LAMP if Lynas goes bankrupt may be the best action for the board to take. It will give everyone involved a course in sourcing in an oligopolistic supply industry and it will let everyone experience the short sightedness of driving a company needed for raw materials into the ground.

    Either the companies that need Lynas to prosper help it or a very hard lesson may be learned later. The question is if Lynas folds and is cut up for scrape, where do the companies to turn for REEs? The answer might be they lose as there are no other players. If Lynas folds because those counting on it sat on the side lines, then from my old Marine days we “take as many as we can with us.” I’d scrape the LAMP with no regrets and sit back and watch what happens next.

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