Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Lynas -RareLynasEarths Rare(LYC.AX)Earths (LYC.AX)

Strategic industry leader, but growth fairly priced

PRICE TARGET A$15.70 EQUAL-WEIGHT THESIS

Our base case is calculated via DCF-based SotP, probability-weighted 20% bull, 60% base,

20% bear, with the bull weighting reflecting scarcity value of ex-China rare earths ▪NdPr is key for magnet production, where

production, and upside from potential expansion into NdFeB permanent magnet we see potential for significant upside out to

manufacturing (not in our base case). 2050 with the adoption of EVs and rise of

DCF: WACC 9.5% (beta 1.15, CoD 5.5%, CoE 11.3%). embodied AI, such as humanoid robots.

is expanding its separated HRE A$20.45 ▪LYC

product offerings through a new A$180m

Consensus Price Target Distribution A$9.50 A$25.50 HRE separation facility in Malaysia expected MS PT

by end-CY27, which we expect will driveSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

earnings growth; however, full utilisation

requires a third-party feedstock solution,

which remains a key uncertainty.

RISK REWARD CHART ▪LYC has firm offtake for 5ktpa of NdPr at a

US$110/kg price floor from Japan Australia

Rare Earths B.V (JARE) out to 2038, which

AUD

A$25.05A$25.05(+62.87%)A$25.05(+62.87%)(+62.87%) de-risks cash flows; however, we see this as

priced in to the stock at current levels.

Consensus Rating Distribution

18 62% Overweight

A$15.38A$15.38A$15.38 A$15.70A$15.70(+2.08%)A$15.70(+2.08%)(+2.08%) 23% Equal-weight

15% Underweight

A$12.70A$12.70(-17.43%)A$12.70(-17.43%)(-17.43%) MS Rating

Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

0 Electric Vehicles: Positive

JUL '25 JAN '26 JUL '26 JUL '27

Secular Growth: Positive