Rare Earths Global issues profit warning

Shares in Rare Earths Global (REG) plunged by more than a fifth on Tuesday morning after the group admitted it will not meet expectations for the year ended December 31st 2012 and as a result expects to report a normalised loss for the twelve month period.

Shares in Rare Earths Global (REG) plunged by more than a fifth on Tuesday morning after the group admitted it will not meet expectations for the year ended December 31st 2012 and as a result expects to report a normalised loss for the twelve month period.

The company said this was due to the period of rapid change and development occuring in the Rare Earth industry both domestically in the People's Republic of China (PRC) and internationally, which has caused uncertainty. There has also been a steep decline in rare-earth prices by as much as 60% since the start of 2012.

"This uncertainty has lead to significant delays in REG receiving its production quota and not receiving an export quota at all in 2012," the group said.

"This has severely hampered the ability of the group's separation plant and trading divisions to carry out its strategy. In addition, given the current uncertainty, the board has not been able to progress its discussions with Credit Suisse regarding its proposed US$50 million debt facility.

"The board continues with the strategy as set out at the time of the company's flotation on AIM which now includes numerous potential opportunities regarding possible joint ventures which would provide the optimum approach to carrying out this stated strategy."

REG stressed that it continues to believe that the demand for rare earth oxides for new applications will continue to grow and the demand will return to previous levels. It added that it anticipates that the long term outlook for the price of rare earth oxides is positive.

The share price fell 21.57% to 200p by 08:47 on Tuesday.

NR

Recommended

Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022
Share tips of the week – 1 July
Share tips

Share tips of the week – 1 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
1 Jul 2022
Bunzl: boring is good for business
Share tips

Bunzl: boring is good for business

Food-service distribution company Bunzl is not a terribly exciting business, but it looks cheap and could be a great investment, says Rupert Hargreave…
30 Jun 2022

Most Popular

UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022
How to invest in copper, the most important metal in the world
Industrial metals

How to invest in copper, the most important metal in the world

As the world looks to electrify and try to move away from fossil fuels, copper looks set to be the biggest beneficiary. But how can you invest? Rupert…
30 Jun 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022