UBS not impressed with Lynas Corp

Global bank UBS has delivered a scathing assessment of the financial performance of rare earths producer Lynas Corporation.

In its latest research report, UBS said recent aggressive cost cutting by Lynas had come too late.

“The situation is bleak,” UBS said in its most recent research report on the company.

The mining company, which has a mine near Laverton in Western Australian and a processing plant in Malaysia, recently cut an unspecified number of staff and contractors and relocated its head office from Sydney to Kuala Lumpur.

Lynas owes $US35 million for debt repayment due this quarter, and most recently reported it had a cash balance of $38.1 million.

“In our view, in the absence of a debt restructure, more funding is needed,” UBS said in its report.

UBS believes without a debt-refinancing package Lynas will run out of cash before the end of the year.

Lynas’s troubles became apparent when the price for rare earths fell from an average $US150 per kilogram in 2011 to current spot prices of around $US20/kg.

Lynas chief executive officer Amanda Lacaze, who declined to be interviewed, said in a statement the company was focused on expanding production and cutting costs by reducing workforce numbers and renegotiating supplier contracts.