The Lynas Corporation Ltd (ASX: LYC) share price was out of form on Monday and started the week deep in the red.
The rare earths producer's shares finished the day with a sizeable 13% decline to $1.11.
This compares to a 5.6% decline to 4,546 points by the benchmark S&P/ASX 200 Index (ASX: XJO).
This latest decline means its shares have now lost almost half their value since this time last month.
Why did Lynas sink lower on Monday?
Investors were selling the company's shares today after it provided an update on its Malaysian operation.
According to the release, Lynas has temporarily ceased production at its Malaysian plant and put the operation into care and maintenance mode.
This was in response to the Malaysian government's recent announcements regarding the escalation of COVID-19 cases and tighter movement controls in the country. The tighter movement controls in Malaysia are currently scheduled to end on March 31.
The company also advised that it has taken actions to significantly reduce cash outgoings during the temporary shutdown. But it will continue to pay all its staff during the period.
Balance sheet strength.
Pleasingly, management notes that the company is entering this temporary shutdown in a strong cash position. It also expects to be able to avoid a significant majority of its costs under this shutdown scenario.
At the end of December Lynas had a cash balance of $111.8 million and is expected to achieve positive cash flow from operations during the March quarter despite the shutdown. This is before the payment of approximately $14 million relating to the Permanent Disposal Facility (PDF) project announced in January.
Management believes that this positions the company well to quickly resume satisfying its customers' needs upon the restart of its plant when restrictions are lifted.
