Lynas Corporation Limited (ASX: LYC) is one of the top performing stocks on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) on Wednesday with its shares charging nearly 14% to 4.9 cents per unit.
But it's not all good news for shareholders…
The rare earths miner released its quarterly cash-flow and activities reports last week. While it announced its sixth consecutive quarter of increased production volume and sales revenue, as well as a positive operating cashflow of $1.2 million for the month of December, it warned that it was not expecting that strength to be sustained in the March quarter.
As highlighted by The Fairfax Press, UBS has cautioned investors could be wiped out unless the company drastically improves its cash-flow ahead of a heavy round of loan repayments due in the year ahead. With low demand and uncertainty regarding Chinese government policy weighing on rare earths prices, the outlook is not looking good for Lynas or its shareholders.
Given the enormous risks facing the business, investors would be wise to steer clear of the stock altogether. In the meantime, there are plenty of other fantastic investing opportunities to capitalise on.
