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Lynas Corporation Limited: Trick or Treat?

Despite its woeful performance in recent years, rare earths miner Lynas Corporation Limited (ASX: LYC) still manages to receive significant levels of investor attention.

The stock has managed to rise 4.6% over the last week, coming off an all-time low to be trading at 6.8 cents per share. In case you were wondering, that price reflects a fall of 80.7% over the last 12 months and, if you thought that was bad, it’s dropped an incredible 97.5% since peaking at $2.70 in 2011.

In light of the significant setback, does Lynas Corporation present as a trick, or a treat, for prospective investors?

Trick or Treat

To answer that question, let’s take a look at the company’s financial situation. The miner released the results for its first quarter recently which revealed that the miner had just $16.9 million of cash left in the bank as of 30 September. That’s down from $141.4 million at the end of FY13 and from $38.1 million as at the end of FY14.

To put it simply, the situation isn’t looking so great for Lynas. The company has already put its hand out to shareholders twice this year, the most recent time was to raise $83 million in capital. Considering its significant debt levels, I wouldn’t be surprised to see another capital raising in the near future.

No matter which way you look at it, Lynas Corporation looks to remain a trick and should be avoided by investors. Luckily, The Motley Fool’s top investment advisor has just named his BEST stock to buy for 2015 which you could consider instead!

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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