A hint of renewed takeover interest stopped an expected sell-off in Lynas Corporation shares yesterday after the rare earths miner and processor released another statement suggesting its major Japanese ‘friends’ were sticking by it.
Lynas shares had threatened to go into free fall yesterday when the ASX re-opened for trading after Malaysian Prime Minister Mahathir Mohamad seemingly raised doubts about the future of Lynas and its $800 million rare earths processing plant in the country.
But they traded steadily and nearly 8.3 million shares were traded. They closed up a cent on the day at $2.12.
Prime Minister Mahathir said Lynas would be able to continue processing its rare earths in the country, if it agreed to first decontaminate raw material before sending it there. And he suggested that this had been conveyed to companies looking at Lynas.
Wesfarmers launched a spurned $1.5 billion bid for Lynas last month and issued a statement on Sunday that while denying it had talked about the pre-processing, confirmed it had talked to the Malaysian government.
“It is consistent with prior public statements by the Government and the views shared with us in meetings with senior Malaysian Government officials since we announced our proposal to acquire Lynas. We look forward to more detail from the Government about Lynas’ operating licence certainty, to assess the conditionality of our proposal, Wesfarmers said.”
In another statement, this one issued on Monday Lynas said it” notes comments made by the Malaysian Prime Minister about Lynas at a press conference on Friday 5 April 2019.”
“We acknowledge the Prime Minister’s comments and welcome his message about the continuation of Lynas Malaysia’s operations.
“Lynas is seeking clarification from the Malaysian government regarding the recent comments and we will update the market on any developments.
“For some months, Lynas has been developing detailed plans to grow with the market and deliver long term shareholder value. These plans will also assist the company to mitigate risk from any regulatory changes in Malaysia.
“We see value in operating alternative cracking and leaching processing close to our resource. We will provide a further update on our plans and progress in the coming weeks.
“Our Japanese lenders, Japan Australia Rare Earths (JARE), have affirmed their support for the company and the management team as they continue to grow the business.
Sojitz Corporation, Lynas’s distribution partner in Japan was quoted as saying: “Sojitz values our close partnership with Lynas and the Lynas management and sales team. The development of Lynas and its unique IP has supported the development of Japanese industry. Our customers have confidence in Lynas as a valued supplier of sustainable rare earth materials. We look forward to continuing to grow our business alongside our colleagues in the Lynas management team.”
Australian analysts say those strongly supportive comments have raised suggestions there could be some sort of deal to frustrate Wesfarmers – perhaps a share placement or some sort of other equity arrangement.
