Lynas Corporation’s (ASX LYC) shares have climbed 10% in 2 days after the rare earth miner upgraded its mineral resource estimate for its Mount Weld project in Western Australia by 37% to 23.9 million metric tons.
LYC’s strategy is to create a reliable, fully integrated source of rare earths from mine to market through both the Mount Weld mine and its rare earths processing plant which is under construction in Malaysia.
Rare earth minerals are used in modern technology including flat screen tv’s, hybrid vehicles and disk drives, and they are considered energy efficient and environmentally friendly. LYC’s production will be the first rare earth production outside of China in the small but rapidly growing rare earth minerals sector, with Japan the largest market for rare earths outside of China due to its automotive and high-tech manufacturing industry.
LYC is still in the development stage and it reported a full year loss of $57.3 million for the year ending 30 June 2011.
LYC has signed an agreement with Sojitz, a leading Japanese company and the largest indirect supplier of rare earths into Japan. This has helped LYC to secure additional supply in the Japanese market, and this sees LYC allocate over 70% of its initial phase 1 and 2 capacity.
LYC’s shares are high risk and speculative, in an already risky stock market. But the company has first-mover-advantage in the rare earth minerals sector.
STATUS: SPECULATIVE BUY
LYC shares today traded at $1.10
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