Lynas Corp turbo charge rare earth project!

By Nick Crawley on May 1 2009

New funding for Rare Earths Project

After months of uncertainty about the future operations of ASX listed Lynas Corp Ltd (Lynas) the company today announced a binding heads of agreement with China Non-Ferrous Metal Mining (Group) Co. Ltd (CNMC) to become the new majority shareholder in Lynas.

Lynas was thought to be fully funded up until earlier this year when the company disputed a claim that the conditions precedent for the release of a USD 95 M Convertible Bond Facility were not satisfied. This action, strongly disputed by Lynas, in turn lead to the cancellation of a USD 105 M Senior Debt Facility already underwritten by HVB / UniCredit.

The new deal with CNMC totals a capital provision of over AUD 500 M comprised of both debt and equity.

Another addition to the Chinese resource treasury

Acquisitions of major stakes in OZ Minerals, Rio Tinto and now Lynas to name a few in my view confirms the Chinese long term strategy to secure vital natural resources that are necessary to underpin long term growth and also act to diversify a portfolio which is heavily weighted towards US Treasuries. All three companies are clients of Navigator.

The Chinese have seized the opportunity to acquire vital resources at barging basement prices. Given that, US Treasuries only yield a few percent and also have an increasing element of foreign exchange risk one could easily argue that this is the perfect time to pick up distressed resources companies on the cheap at a very low alternative cost.

I give the Chinese thumbs up for their long term goals and strategies compared to the western governments approach to the current financial conditions although it is fair to say this has attracted a lot of views on the matter.

About Lynas

Lynas owns the richest deposit of Rare Earths in the world at Mt Weld, 35km south of Laverton in Western Australia. This deposit underpins Lynas’ strategy to create a reliable, fully integrated source of Rare Earths supply from mine though to customers in the global Rare Earths industry.

Navigators Relationship

Navigator has worked closely with Lynas over the last three years and is pleased to see that Lynas is again back on the road towards commercial operations. Well done team!