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The Lynas share price (ASX:LYC) rose 34% in November. Here’s why

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The Lynas Corporation Ltd (ASX: LYC) share price has just had a top month. Lynas shares started November at $2.83, and closed yesterday at $3.78. That means the Lynas share price is up 33.57% for the month of November.

You might remember Lynas from its dalliance with the giant conglomerate Wesfarmers Ltd (ASX: WES) a couple of years ago. Back then, Wesfarmers tried (unsuccessfully) to buy out Lynas and add it to the company’s massive portfolio of subsidiary businesses. Incidentally, Wesfarmers bid $2.25 a share for the company back then.

But Lynas has shown it has what it takes to thrive on its own two feet since. The Lynas share price is up nearly 63% year to date. It’s also up more than 250% from the lows we saw back in March. It even hit a new 52-week high last week.

But why?

A great month (and year) for the Lynas share price

Lynas is an Australian-based company involved in the exploration and mining of rare earth metals.

The recent goodwill surrounding Lynas shares appears to have been kicked off by a contract with the United States Department of Defense back in July. This agreement inked a plan to construct a heavy rare earth separation facility. It is set for completion during the current financial year (FY2021).

This goodwill was further boosted by a quarterly update for the quarter ending 30 September 2020. In this announcement, Lynas updated investors on the production issues that had previously plagued both its flagship Mt Weld mine in Western Australia, and its Malaysian operations. After the initial issues, Lynas told the market that output had resumed at 75%. It also reported solid sales numbers, as well as positive cash flow. The Lynas share price hit what was a new 52-week high on that news.

Then, just last week, Lynas yet again came to the market with a positive development. This time, Lynas announced that the company had found “significant and continuous intersections of rare earth minerals… including light rare earth elements and heavy rare earth elements” at its Mt Weld site.

Lynas’ chief executive officer, Amanda Lacaze, had this to say on this discovery:

We are encouraged by these new Exploration Results which go beyond the area of the 2018 Mineral Resources and Ore Reserves Statement. We are committed to exploring below the current mineral resource understand the potential for primary REE mineralisation below the weathered zone.

It’s this avalanche of good news that is likely behind the Lynas share price’s stellar performance over the month of November. And indeed, over 2020 so far.

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Returns as of 6th October 2020

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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