Lynas Corp share price climbs 5% on licence extension speculation

The Lynas Corporation Ltd (ASX: LYC) share price has surged 5% higher on the ASX today after reports the Malaysian government is nearing a decision on the company’s licence extension.

What decision is Lynas Corp waiting on?

The company is awaiting a decision by the Malaysian government on its operating licence, which is vital for its continuing operations and expansion within Malaysia and greater Asia. Malaysian newspaper, The New Strait Times, Australian High Commissioner to Malaysia Andrew Goledzinowski said the government was close to extending Lynas’ operating licence and said the Australian government is “waiting for the final determination in the matter”.

According to Goledzinowski, authorities asked Lynas to export stockpiles of waste product from its processing plant by 2 September 2018 when its licence was due for renewal.

While there appears to be little other news for the rare-earth mining company, Lynas’ investors have been buoyed by the potential advancement in licence negotiations and a little more surety about the company’s future in Malaysia.

What else has been happening for Lynas?

The company announced progress for its NUF residue that it produces at its Lynas Malaysia plant, with an agreed pathway for the management of NUF following extensive consultation with the government and regulators. The updated NUF action plan included commercialisation options for NUF and long-term NUF disposal solutions which were big steps for the controversy-plagued company.

The company reported softer earnings in its half-year results, with revenue falling 10.5% on prior corresponding period (pcp) to $179.8 million, while net profit came in 62.6% lower on pcp at $19.0 million.

Is Lynas a Buy?

The current share price of $1.65 per share is a far cry from the $2.31 valuation at the start of 2018, or the record-high $24.09 share price way back in April 2011. With no dividend yield on offer, investing in Lynas at this point is a real punt on their ability to clear regulatory hurdles and commercialise its products in Malaysia in coming years.

In the meantime, I’d be steering clear of Lynas and fellow mining prospects Galaxy Resources Limited  (ASX: GXY) and Orocobre Limited  (ASX: ORE) in favour of these top growth shares that have been tipped as market beaters.

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