ASX:LYC
Lynas Rare Earths Ltd
Investment Summary
The fund managers believe that Lynas Rare Earths Ltd (LYC), as the largest producer of separated rare earth materials outside of China, holds significant strategic value in the current market. In their opinion, the company’s market capitalisation of approximately $7bn and its ownership of the high-grade Mt Weld mine position it favorably against a backdrop of increasing demand for rare earths in technologies like electric vehicles and wind turbines. They note that approximately 90% of separated rare earths are produced in China and see LYC as crucial for diversifying supply chains that are currently over-reliant on China. The fund managers highlight LYC's ambitious Lynas 2025 plan, which aims to enhance production capacity significantly and cement its status as a leading ex-China rare earth producer. They commend CEO Amanda Lacaze for her leadership, believing she has transformed the company into one of the most formidable players in the industry. This unique positioning and the company's strong financial health further emphasize LYC as a robust investment opportunity.
Commentary From The Managers
Greencape Capital
30 Sept 2024
$8.02
- Lynas Rare Earths (LYC) is the largest and only significant producer of separated rare earth materials outside of China.
- Currently has a market capitalisation of approximately $7bn.
- Rare earths have unique magnetic and electrochemical properties, enabling technologies to perform better.
- There is a strong demand outlook for rare earths, driven by growth in automobiles, wind turbines, and robotics.
- The global rare earth supply chain is dominated by China, producing about 90% of separated rare earths.
- LYC owns the Mt Weld rare earth mine in Western Australia, noted for being one of the largest and highest-grade mines.
- LYC's concentrate is processed at its facilities in Kalgoorlie and Malaysia.
- LYC is nearing completion of its Lynas 2025 plan to expand production by over 50%.
- Greencape Capital has been a shareholder in LYC since 2018, rating it the highest among Resources stocks on the ASX.
- LYC has a strong net cash balance sheet, enabling funding for expansion through operating cash flow.
- CEO Amanda Lacaze is highly rated, transforming LYC into a leader in the rare earths sector.
- LYC's culture and employee care contribute significantly to its success over the past decade.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.