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Here is UBS valuation ...

UBS Research - Last month on 22/04/2020 9:55 PM
Lynas Corporation "US DoD Tender Win Highlights Strategic Value" (Buy) Morgan

Lynas wins a tender with the US Department of Defence
Lynas has announced that they have been successful in being selected for a Phase 1 of a US Department of Defence tender for a Heavy Rare Earth separation facility. This is good news. Firstly this in time could lead to a sizeable funding contribution to a new downstream business unit for Lynas. Secondly the news reinforces the underlying strategic value of Lynas business as the only non-China producer of rare earths. This value does not appear to be in sharp focus for the equity market at the moment, with Lynas trading at a ~50% discount to our NPV. Once the world begins recovery from COVID-19, we believe that global supply chains may be realigned towards a greater diversity of sources. Lynas is well placed to benefit from this in our view through new customers in the US and Europe and with potentially better pricing terms.

What are the benefits of a heavy separation facility to Lynas?
Lynas currently sells separated light rare earth products. These light rare earths constitute 95% of Lynas resource by volume and ~80% by value if all products were separated. But the heavy rare earth products are not separated by Lynas at present, so it does not capture all of this revenue/margin opportunity. Heavy Rare Earths are currently sold in an intermediate product via auction to China separators. These separators earn a margin that a Lynas facility in the US could capture and potentially expand. Lynas ore bodies are ~5-7% Heavy Rare Earths by volume in-situ, but if separated could lift from ~5-10% of revenue now to ~15-25% based on recent prices.

We do not yet factor in the potential value of a downstream facility
We do not yet include a heavy separation facility in our forecasts due to uncertainty about the economics (capex, opex, funding). In concept we think the facility might cost up to $100m. Reuters has indicated that the US Department of Defence may contribute up to two thirds of this funding task. The additional EBIT of Lynas moving downstream might be >$10m+ per annum, but split with Blue Line in the JV. Lynas should capture in our view the largest part of this from providing the feedstock, and the equity return should be very attractive if funding is forthcoming from the US Department of Defence.

Valuation: $2.68ps (DCF, 10% d.r. and US$60/kg long term NdPr)
Our price target of $2.70ps is based on our NPV estimate.

<blockquote data-quote="Chief_Wigam" data-source="post: 1070581" data-attributes="member: 80103">Here is UBS valuation ...UBS Research - Last month on 22/04/2020 9:55 PMLynas Corporation &quot;US DoD Tender Win Highlights Strategic Value&quot; (Buy) MorganLynas wins a tender with the US Department of DefenceLynas has announced that they have been successful in being selected for a Phase 1 of a US Department of Defence tender for a Heavy Rare Earth separation facility. This is good news. Firstly this in time could lead to a sizeable funding contribution to a new downstream business unit for Lynas. Secondly the news reinforces the underlying strategic value of Lynas business as the only non-China producer of rare earths. This value does not appear to be in sharp focus for the equity market at the moment, with Lynas trading at a ~50% discount to our NPV. Once the world begins recovery from COVID-19, we believe that global supply chains may be realigned towards a greater diversity of sources. Lynas is well placed to benefit from this in our view through new customers in the US and Europe and with potentially better pricing terms.What are the benefits of a heavy separation facility to Lynas?Lynas currently sells separated light rare earth products. These light rare earths constitute 95% of Lynas resource by volume and ~80% by value if all products were separated. But the heavy rare earth products are not separated by Lynas at present, so it does not capture all of this revenue/margin opportunity. Heavy Rare Earths are currently sold in an intermediate product via auction to China separators. These separators earn a margin that a Lynas facility in the US could capture and potentially expand. Lynas ore bodies are ~5-7% Heavy Rare Earths by volume in-situ, but if separated could lift from ~5-10% of revenue now to ~15-25% based on recent prices.We do not yet factor in the potential value of a downstream facilityWe do not yet include a heavy separation facility in our forecasts due to uncertainty about the economics (capex, opex, funding). In concept we think the facility might cost up to $100m. Reuters has indicated that the US Department of Defence may contribute up to two thirds of this funding task. The additional EBIT of Lynas moving downstream might be &gt;$10m+ per annum, but split with Blue Line in the JV. Lynas should capture in our view the largest part of this from providing the feedstock, and the equity return should be very attractive if funding is forthcoming from the US Department of Defence.Valuation: $2.68ps (DCF, 10% d.r. and US$60/kg long term NdPr)Our price target of $2.70ps is based on our NPV estimate.</blockquote>

[QUOTE="Chief_Wigam, post: 1070581, member: 80103"] Here is UBS valuation ... UBS Research - Last month on 22/04/2020 9:55 PM [SIZE=5][B]Lynas Corporation "US DoD Tender Win Highlights Strategic Value" (Buy) Morgan[/B] [/SIZE] Lynas wins a tender with the US Department of Defence Lynas has announced that they have been successful in being selected for a Phase 1 of a US Department of Defence tender for a Heavy Rare Earth separation facility. This is good news. Firstly this in time could lead to a sizeable funding contribution to a new downstream business unit for Lynas. Secondly the news reinforces the underlying strategic value of Lynas business as the only non-China producer of rare earths. This value does not appear to be in sharp focus for the equity market at the moment, with Lynas trading at a ~50% discount to our NPV. Once the world begins recovery from COVID-19, we believe that global supply chains may be realigned towards a greater diversity of sources. Lynas is well placed to benefit from this in our view through new customers in the US and Europe and with potentially better pricing terms. What are the benefits of a heavy separation facility to Lynas? Lynas currently sells separated light rare earth products. These light rare earths constitute 95% of Lynas resource by volume and ~80% by value if all products were separated. But the heavy rare earth products are not separated by Lynas at present, so it does not capture all of this revenue/margin opportunity. Heavy Rare Earths are currently sold in an intermediate product via auction to China separators. These separators earn a margin that a Lynas facility in the US could capture and potentially expand. Lynas ore bodies are ~5-7% Heavy Rare Earths by volume in-situ, but if separated could lift from ~5-10% of revenue now to ~15-25% based on recent prices. We do not yet factor in the potential value of a downstream facility We do not yet include a heavy separation facility in our forecasts due to uncertainty about the economics (capex, opex, funding). In concept we think the facility might cost up to $100m. Reuters has indicated that the US Department of Defence may contribute up to two thirds of this funding task. The additional EBIT of Lynas moving downstream might be >$10m+ per annum, but split with Blue Line in the JV. Lynas should capture in our view the largest part of this from providing the feedstock, and the equity return should be very attractive if funding is forthcoming from the US Department of Defence. Valuation: $2.68ps (DCF, 10% d.r. and US$60/kg long term NdPr) Our price target of $2.70ps is based on our NPV estimate. [/QUOTE]

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