Why Lynas Corporation Limited soared 17.7% today

Investors turning positive on the rare earths producer?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Rare earths producer Lynas Corporation Limited (ASX: LYC) saw its shares soar 17.7% today to close at 20 cents.

By comparison, the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) gained 0.6%.

It marks the third day in a row of gains, and Lynas shares are now up 52% since Thursday, 17 July. It appears that investors have turned positive on the company, with BBY analyst Mike Harrowell telling Fairfax media that the company had now passed the point by which it would be required to disclose if it was at risk of missing June quarter production guidance, ahead of a formal update in the Quarterly Activities Report due to be released on July 31.

Mr Harrowell said, "If Lynas does meet production guidance, it will mark an important milestone in the Malaysian processing plant achieving profitability". There's still a long way to go for that though.

In the company last update, it said it had removed some bottlenecks which were affecting production, and was working on delivering the optimal balance of volume, finished product quality and REO yield.

But rare earth oxide prices are still well off their highs in 2012, and are around Lynas's estimated cost of production. Factor in US$440 million of debt, and shareholders may have to wait some time before they see Lynas profitable. Having raised capital in May, another one could be on the cards in the near future.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »