Lynas Corp., which is all set to fire up its rare earths processing facility in Malaysia in October, could once again get embroiled in a legal court battle after its temporary operating licence (TOL) has been put on hold by a Malaysian high court until Oct. 4 pending an injunction filed by opponents to the plant.

Investor confidence immediately had a ripple effect as shares of the Australian rare earths miner dropped as much as 6.5 cents to 73 cents, or 8.2 per cent, in early trade. It recently traded at 75 cents.

This despite assurance from Lynas that the court order will not have an impact on the planned operation start-up of the rare earth plant, which is touted to be the world's biggest outside China, the world's rare earths hub.

"That interim order is not anticipated to impact on Lynas' planned schedule, because Lynas has planned for first feed to kiln at the Kuantan plant after Oct. 4," Lynas said in a statement.

"At the hearing both Lynas and the Malaysian Government intend to strongly assert Lynas' rights to operate in accordance with the approved and issued TOL."

Save Malaysia Stop Lynas filed the injunction against Lynas' TOL because it wants the high court to suspend the licence until two judicial review cases challenging the government's decision allowing the plant to operate are heard.

"It's a small victory, but there is still a long way to go," Tan Bun Teet, a spokesman for the group, told Reuters after the court decision. "We will fight tooth and nail. We have a lot at stake," he added.

The rare earths plant has been expected to have started operations in September last year. although Lynas was granted the TOL in early February this year, political opposition in Malaysia had consequently delayed the release of the highly coveted licence to only until early this month.

Because of the delays, Lynas is currently in talks with Sojitz Corp for a renegotiation for nine months of a $US225 million ($216 million) credit line.