Analysts recommend investors dump Lynas

Foster Stockbroking has recommended investors sell shares in Lynas because the company's rare earths processing plant in Malaysia is likely to face further delays.

In an investor note today Foster said approval of the Lynas Advanced Materials Plant had been "a drawn out saga" and the upcoming Malaysian election would force further delays.

"Appeals by local groups and the opposition party regarding the environmental impacts of the plant have resulted in the LAMP becoming a politically sensitive issue and delayed a final decision on issuing the licence," Foster analysts said.

"The appeal against Lynas has been dismissed, the plant has complied with Malaysian and International standards and Lynas has met or has submitted proposals for all conditions stipulated in the issuance of a temporary operating licence."

"However, with an election imminent and given the political sensitivity surrounding the plant we believe the saga will continue."

Foster analysts said a temporary operating licence was not expected to be granted to Lynas until after the election and due to the controversy surrounding the plant there was little incentive for the Malaysian Government to approve the project.

Analysts said while Lynas still had significant funds the delays would cause "balance sheet difficulties" and investors holding Lynas shares should sell their stakes.

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