Lynas Corporation Ltd (ASX: LYC), an integrated miner and producer of rare earths, witnessed a share price rise of 4.8% on March 05, 2018 as it released strong financial results for the half year ending December 31, 2017 (H1 2018) with $78.69 million half-year profit after tax. The group saw operational and production improvements over the past three years and is benefitting from increased customer demand and favourable market pricing this half year. The group’s EBIT increased to $63.0m against H1 2017 loss of $19.3m while adjusted EBITDA increased to $85.5m (H1 2017: $2.1m). The revenue was up 75% to $200.9m from $114.6m of H1 2017 due to higher sales volumes and higher selling prices.

The debt has reduced to USD256.5m in the half year and this is now USD236.5m as at January 2018. This was a result of early principal repayments of USD30.0m on the JARE loan during the half year and the conversion of over 70% of the convertible bonds between 1 July 2017 and 31 January 2018. On the other hand, the group did not pay a dividend despite the encouraging result witnessed after many years.

The group is now inching up on its new growth path with investment in Lynas NEXT. LYC will invest $35 million in the Lynas NEXT programme to improve plant reliability and recoveries, increase production, deliver a higher value product mix, and increase customer engagement.Thus, the company’s capacity to meet current and future demand will be based on this plan.

Looking at the trading level, it might be important to watch for a dip in stock price for any investment opportunity.
 

Operating costs vs Production and Sales Revenue (Source: Company Reports)

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