ANALYSTS remain unimpressed by rare earths miner Lynas's financial position despite this week's legal win that will allow it to operate a rare earths plant in Malaysia.
Deutsche Bank and JP Morgan have warned of difficulties and shortfalls in achieving free cash flows and the possibility of further delays to the plant.
The miner said on Friday it will tap investors for as much as $200 million of fresh capital to finish building the facility.
After long delays due to opposition on environmental grounds, Lynas on Thursday received Malaysian court permission to begin operating a controversial processing plant in Gebeng, Malaysia.
The Kuantan High Court ruled against Malaysian activists that had sought an injunction against Lynas' temporary operating licence for the plant.
The extra funds raised will be used for working capital and general corporate purposes during the commissioning and ramp-up at the Lynas Advanced Materials Plant in Malaysia.
Deutsche Bank warned clients that legal proceedings against the Malaysian Atomic Energy Licensing Board's decision were continuing.
Further delays brought downside risks to first cash flow, still an estimated five months away, it said.
Lynas can access only another $80 million in debt, with Deutsche Bank estimating that it requires $120 million to fund the plant.
"Any other funding will need to come from forward sales or equity in our view," it said.
It has a sell recommendation on the stock, while JP Morgan warns Lynas needs to finalise new working capital imminently.
Lynas said in a statement on Friday that the capital raising would give it positive cash flows to meet capital expenditure requirements and provided a significant cash buffer to allow for unforeseen events.
The capital raising will involve a fully underwritten institutional placement to raise up to $150 million and a partially underwritten share purchase plan available to all existing shareholders to raise up to $50 million.
The plant on the country's east coast would be the biggest outside China and is considered important to breaking China's 95 per cent stranglehold on global supply, with rare earths having a range of hi-tech uses such as in hybrid cars and computers.
Lynas rejects opponents' claims that radioactive waste from the plant would be harmful to humans.
Malaysia previously hosted Mitsubishi's rare earth processing plant until 1992, which some residents say has caused health problems including birth defects and cancer.
Lynas shares are in a trading halt and due to resume trading on Monday.
The raising is underwritten by JP Morgan.
Lynas last traded at 80.5 cents.
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