0.42% \$2.38 lynas corporation limited

# sanity

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A nerve tonic for those holding and getting scared...

Subject: LYC research Likely earnings

Assumptions:
1,750,000,000 shares on issue including options,
\$9 per kilo production costs ( company argues for \$7)
Based on sales at \$30 per kilo.
Add 12.5cents per share for each additional \$10 per kilo achieved for processed product above \$30 per kilo.

End result of data below is 22000 tonnes earnings of 63.5 cents per share if basket remains at \$70 approx and rhodia take out 4000 tonnes at \$15 per kg. So PE of 10 would indicate a possible share price of \$6.30ish by next year if basket holds. More if basket or production facilities go up and of course less if basket goes down. Worst case scenario IMHO is \$40 basket with 22,000 tonnes indicating a share price of \$3.30 on PE of 10. I doubt we'll ever see that low a basket but an interesting figure upon which to base todays holdings and purchases. The \$4 club looks pretty safe at sometime in 2011:)
64 years of production already drilled at 22,000 tonnes per year

Negative impact on figures below for Rhodia contract at following assumptions.
4000 tonnes at \$15 per kilo for Rhodia less 14.9 cents per share at \$80
4000 tonnes at \$15 per kilo for Rhodia less 13 cents per share at \$70
4000 tonnes at \$15 per kilo for Rhodia less 10.3 cents per share at \$60
4000 tonnes at \$15 per kilo for Rhodia less 8 cents per share at \$50
4000 tonnes at \$15 per kilo for Rhodia less 5.7 cents per share at \$40
4000 tonnes at \$15 per kilo for Rhodia less 3.4 cents per share at \$30

Based on 11,000 tonnes in year 1= 13.2 cents per share @\$30
@\$40 = 19.5 cents per share
@\$50 =25.7 cents per share
@\$60 =32 cents per share
@\$70 =38.3 cents per share
@\$80 =44.6 cents per share

Based on 22000 tonnes in year 2=26.4 cents per share @\$30
@\$40 = 39 cents per share
@\$50 =51.5 cents per share
@\$60 = 64 cents per share
@\$70 =76.5 cents per share
@\$80 =89 cents per share

DYOR

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