Rates went up on Tuesday. On Thursday, Lynas paid in shares.

What happened

On Tuesday 29 September the RBA lifted the cash rate 25bp to 4.60%, its fourth hike of 2026, saying inflation is still too high.

Two days later Lynas Rare Earths agreed to buy Meteoric Resources, owner of the Caldeira ionic clay rare earths project in Brazil. The scheme offers 0.0207 Lynas shares for each Meteoric share: about 28.6c, a 68.4% premium to Meteoric's last close of 17c, and roughly $968 million on a fully diluted basis. Meteoric holders would end up with about 5.9% of Lynas. Meteoric's board and its largest shareholder back the deal, absent a better offer.

What Lynas is buying

• The resource. 1,631 million tonnes at 2,317ppm total rare earth oxides, including an ore reserve of 151 million tonnes at 3,524ppm, and a projected 23-year mine life.
• The deposit type. Ionic clay, the style of deposit behind much of the world's heavy rare earth supply.
• The bridge. Lynas will lend Meteoric up to $110 million of working capital to keep Caldeira moving before completion.

The market's verdict

Lynas shares fell about 7% on the day, and as much as 7.8% to $12.75 in early trade. The worries: Caldeira's US$498 million of upfront capex, which Market Index put at a little over half of Lynas' $1.2 billion of cash, in a country where Lynas has never operated. Lynas shares were already down 19% over the past year, against a 1% fall for the ASX 200.

Why pay in shares

All-scrip keeps Lynas' cash for the build, in the same week the cash rate hit 4.60%. The cost is dilution, paid in a currency the market has already marked down. Meteoric holders, meanwhile, swap a single-project developer for a stake in an established producer with a mine to build in Brazil.

The mid-market read

Paying in shares spares a buyer the bank, which matters more when debt is getting dearer. For the seller, it means becoming an investor in the buyer. If you are offered shares, do the diligence in reverse: the buyer's balance sheet, its next big spend, and what its share price might do the day the deal lands.

What to watch

• The independent expert's report and the scheme booklet, due in December.
• Regulatory and court approvals, with completion running into early 2027.
• How Lynas funds Caldeira's build without coming back to shareholders.

General information only, not financial product advice.