LYC 4.75% $7.28 lynas rare earths limited

Q1 and Q2

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    ASP this is my biggest error.   I was wrong because I did not even consider NDPR being 40% of Total sales.   I expected 30%.    I was wrong and I am not arguing that.  It is important for all to understand why because this will have a big impact on Q2 and H1.    For reason well explained by AL in CC NdPr was way up in Q1 and La and Ce were way down.  She also explained why NdPr MAY be down 400T in Q2 and La and Ce up in Q2.    Knowing what makes up Q1 numbers   will help predict Q2.  I am going to ignore that they  sold some SEG in Q1.  No idea of price or volume so only thing I can do is ignore this. It raised the ASP for Q1.      I have worked out in AUD what I believe Lynas received in Q1.  NdPr  = AUD 60 *1630 tons = 97.6 M   La and CE =   3.24 * 2266T  =$7m  very close to actual  105M.   Both of these numbers are about 105% of the current price not including VAT.    ASP, NDPR is  1630 / 3896 = 42% of volume.  42% *$60= 25.15,   La and Ce is 58% * 3.24=1.8  this gives an ASP of $27.00.    I did not show math of how I derived these numbers because it involved using two unknowns and I do not want to explain it.  I do offer these two proofs to show my numbers are very close.  First they equal Lynas revenue.  Second they equal Lynas’s  ASP. Third they are in proportion with market prices.    I have not considering SEG.  I doubt its sales would have more than a 5% impact.   Conclusion Lynas received 105% of market price – VAT.    That /average for NdPr was AUD  $60 /KG.  Average for LA and CE was AUD 3.24.   One note in calculation I used the individual prices for La and CE.  I averaged them for this. 


    Here are my Q2 guesses. I will tell you how I came to them. It is very possible that the AM will give details that will change them.   I am also going to use Q1 prices for REO.   I personally feel Prices will drop further but we can recalculate if that happens, or they go up.     Since you know how I derived them it will be easy to calculate change.  Again I will ignore SEG.  NDPR 600T * 3 = 1800 T – 400T =1400T.  I realize that AL said up to 400T several times in Q1 CC but 400 was the only number she used consistently.   It may be high but what else can I justify.   Feel free to use a lower number.   Ce and La ( again I am going to combine them just easier). I do not have a good idea of this volume even after listening twice to Q1 CC.  If you have a different number post it with reason and I will be glad to redo my guess numbers.     They made 3641 tons  of La and CE this Q   they put 1324 tons into inventory   I am going to assume they make and sell all 3700 tons of La and CE in Q2 That they sell a third  of what they put in inventory Q1  total 4150 tons.   I think this is high so put in your own guess.  

    Assuming no price changes, Unlikely,   1400 * $60 = AUD $84M from NdPr.  4150 * 3.24 = 13.5M  from La and Ce,   total =  98 M revenue Q2.       ASP for Q2 follow math above and it comes to $19.00   use 5100T for total production.   

    COP /KG  went down to $13.3   this is in spite of bonuses and some problems in early Q1.  This should be a pleasant surprise for  all  holders, I do not hold much stock but I am very glad to see this improvement.  It lowers the bar for when I will buy.     NEXT is finally doing what they said.    For record Q3 was $15.60,   Q4 16.20.  From the depths of my memory subject to inaccuracies.  I think this NC said $13.00, 8 years ago, we are there.    This is very good.  Based on this COP I will lower my breakeven point for Lynas to an NDPR price of 300RMB down from  320.00 RMB both with VAT.  My math indicates it should be even lower but until I see the NEXT impact for a few Qs I would prefer to take smaller steps.   If someone thinks it is 280 RMB including VAT, I would not argue. 

    Cash flow.  I was low in what I said about cash flow.  I was expecting plus or minus 4M it was 24 M  Now in previous posts I mentioned 27M paid to JARE but did not here.     So it was about minus 3 M  Q to Q including JARE payment.  AL told us this included bonuses for 2018 so it would have been higher if not for that.   Unsure how much.      You want to say I was wrong because I did not qualify JARE that’s fine with me.    If you’re not consider this when calculating H1 profits you are making a big mistake. 



    Revenue – COP  was 35M and I was low on this.  

    I put allot of work into this.  I probably made a few mistakes and a few bad assumption.    I welcome people pointing them out.  It will help me to be more accurate.    I know it will be hard but could people refrain from saying I am crazy or all wrong without pointing out anything!    Just put me on ignore and ignore this  if you think I am wrong, and you have no ability to say why. 

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