"Many in the market were skeptical that the license would get issued because it seemed to be heavily politicized," said Andrew Harrington, resource analyst at Patersons Securities, in comments15 to Bloomberg. "It's going to be extremely positive for the share price which has been suffering from a lot of shorting because of the doubts."

In a recent market overview16, Jim Jubak, manager of the Jubak Global Equity Fund, presented a bullish outlook, stating, "I think a reasonable short-term target for the shares is $1.00 to $1.20 a share, a big jump from Wednesday's 87 cents a share (and even bigger from Tuesday's close at 59 cents)."

However, Jubak also stressed that political concerns over the license will continue to dampen the stock's performance and that there is still fear within the market that an opposition victory in national elections could result in the withdrawal of the TOL. He forecast that the company's stock could move up to between AU$1.00 and $1.20 over the next few months, with further advances dependent on results from the plant, as well as on what direction the REE market price is headed at that time.

David Fuller's view This is welcome news for Lynas (weekly & daily) and managers for the Australian company will presumably have their mettle tested in terms of plant safety. The shares also rallied earlier this year, in line with global markets and also on rumours that the Malaysian plant would receive its operating license, which proved to be premature.

What is the outlook for Lynas and other rare earths miners today?

There is nothing particularly rare about rare earth elements (REEs) although they were in short supply when China dramatically reduced supplies for export a couple of years ago. This generated considerable interest in the sector, until high prices encouraged increased production by other countries, reduced consumption and substitution.

These are the classic responses to high commodity prices, as veteran subscribers will have noted over a number of cycles, and weak GDP growth pushed REE prices even lower. Today, prices are bombed out and therefore longer-term recovery candidates. A takeover or two within the sector would revive interest beyond short covering but rallies for some of these shares may also be pegged back by the need to raise additional capital.

With limited scope for earnings anytime soon, I regard REEs as highly speculative, especially when so many high quality and diversified miners are beginning to recover. Nevertheless, the next mining boom, requiring a China-led global economic recovery, should lift REE prices considerably from current levels. That may seem like an unlikely prospect today but the base building process has probably commenced, as you can see from Lynas' weekly key reversal above and what appears to be a ranging support building process by Avalon (weekly & daily) and Quest (weekly & daily).

I remain a stale bull of all three shares, which have desirable assets, so I will hold them for their longer-term recovery potential. When cyclical mining shares next become fashionable and therefore overbought, prices of today's most depressed miners are likely to be several hundred percent higher.