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.
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"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.
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