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Lynas Corporation Limited (ASX: LYC), a rare earth metal extractor and processor, recently released its Investor Day presentation in which, the company mentioned its plan to become a large business to meet the forecast demand growth.
The company primarily focused on the growth of rare earth metals and mentioned that the high cost of electric vehicle segment would push the demand for rare earth metals. As, rare earth metals of 2kg of REE magnets would cost US$100 per vehicle, and the efficiency of REE motor is 2-5% higher as compared to its alternatives.
As rare earth elements are more efficient, the target range of saving energy reaches with smaller, lighter and cheaper batteries.
LYC mentioned that apart from a few luxury car brands, many automotive players are adopting the rare metals.
Lynas holds a significant amount of mineral and ore reserves and acts as a valuable rare metal operator outside China.
The total Mineral Resources of the company for its tier-1 Mt Weld rare earth deposit stands at 55.4 million tonnes, with total rare earth oxide of 5.4 percent, which would account for 3,000k tonnes.
The JORC classified Measured Mineral Resources of the prospect stands at 17.5 million tonnes with a total rare earth oxide of 8.0 per cent, which would account for 1,400k tonnes of total rare earth oxides.
The Indicated Mineral Resources of the prospect stands at 12.0 million tonnes with a total rare earth oxide of 5.5 per cent, which would account for 660k tonnes of total rare earth oxides.
The Inferred Mineral Resources of the prospect stands at 25.9 million tonnes with a total rare earth oxide of 3.6 per cent, which would account for 930k tonnes.
Source: Companyâs Report
The Proven Ore Reserves of the tier-1 resource deposit of the company stands at 14.6 million tonnes with a total rare earth oxide of 8.9 per cent, which would account for 1,290k tonnes, and total Probable Ore Reserves of Mt Weld are at 5.1 million tonnes with total rare earth oxide of 7.7 per cent.
Source: Companyâs Report
The companyâs outlook coupled with its projection of high demand for rare metal in the growing electric vehicle segment pushed the share prices of the company up at the Australian Securities Exchange (ASX).
Price Actions:
The shares prices of the company dropped from the level of A$2.960 (Dayâs high on 8th May 2018) to the level of A$1.545 (Dayâs low on 25th October 2019), from where the prices rebounded and rose to the level of A$2.400 (Dayâs high on 12th November 2018).
After a steep rise on price from A$1.545 to A$2.400, the prices again plunged and marked a level of A$1.480 (Dayâs low on 4th January 2019), from where the share prices of the company started moving in an uptrend.
The prices rose significantly from the level of A$1.480 to the present level of A$2.760 (Dayâs close on 29th May 2019).
Performance metrics:
The improvement in the share prices marked a return of 55.70% on YTD basis, and amid recent improvement in prices, the company delivered a rate of return of 13.27% and 35.80% in six and three months respectively. The stock of the company last traded at A$2.760, up by 15.481% from its previous close (as on 29 May 2019).
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