Australian Rare Earths

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Old 12-06-2010, 01:00 AM
Sparty Sparty is offline
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Default Rare Earths a STRATEGIC commodity: LYC to be first new producer in 2011

Back in June this year JP Morgan in June initiated coverage on Lynas Corporation (ASX: LYC) with an overweight rating and a $0.91 Jun 11 price target.

LYC's price is now almost 6 months later is much higher and is $1.585 (Dec 6 th 2010). This makes JP Morgan's latest announcement of an "overwieght" with a 35% increase to come even more interesting.

From Australian-Shares.com/forums: "JPMorgan has upgraded Lynas to "overweight" from "neutral" and increased its 12-month share price target to $2.17 from $1.71." Dec 2010

So J P Morgan's call in June -2010 whilst bullish seems to have markedly underestimated where LYC was going. O
f course J P Morgan could not have known that China would play some games with REE exports that may have been in response to a political situation with Japan.

But the world is now on notice that the Rare Earths and in particular the heavy REEs are a strategic commodity...
as recently amplified with the associated commentary surrounding the USGS 2010 report into the rare earths that highlighted the USA's military's dependence on the REEs and the panicked rush to secure supplies that has been generated since. Even K Rudd has declared an interest with a much questioned commitment to supply Japan with REEs.

As Lynas Corp is the only realistic new ex-China supplier of both the light and heavy REEs in 2011 we can probably expect LYC to once again well outperform J P Morgan's target.

One well respected Australian broker has a $3 short term $6 longer term target.

 

Disclaimer: The author of this post, may or may not be a shareholder of any of the companies mentioned in this column. No company mentioned has sponsored or paid for this content. Comments on this forum should never be taken as investment advice.

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