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TORONTO (miningweekly.com) – US integrated rare earths producer Molycorp’s NYSE-listed stock on Thursday slid 12.5% after the company reported a wider-than-expected first-quarter loss and confirmed that it would require further financing this year to meet its business plan and obligations as they became due.
NYSE-listed Molycorp, which operates the Mountain Pass rare earths mine and processing facility, in California, explained that in light of the continued softness in the prices for its products, inconsistent or depressed demand for certain of its products and the delayed ramp-up of operations at the Mountain Pass facility, would force it to seek additional financing this year.
The Greenwood, Colorado-based company had engaged Oaktree Capital Management last year September to provide up to about $400-million in secured financing through credit facilities and the sale and leaseback of certain equipment at Mountain Pass for corporate, operating and capital expenditures.
It had received initial gross proceeds of $250-million from Oaktree, with the remaining $149.8-million available to be drawn until April 30, 2016, $134.8-million of which was available only if the company achieved certain financial and operational performance targets.
In a Securities and Exchange Commission filing on Thursday the company reiterated that if it was unable to execute its business plan and restructure debt, it might not be able to continue as a going concern. Molycorp said its cash balances fell to $133.6-million as of March 31, down from $211.7-million in December, which represented its primary source of liquidity to fund capital expenditures, debt service and net operating cash requirements.
Rare earths producers such as Molycorp and Australia's Lynas had been weighed down by concerns about how fast they were burning through cash, low prices and the possibility that they might need to issue shares to raise more funds.
The rare earths industry is in a state of consolidation after a Chinese export clampdown prompted a rapid spike in prices in 2010/11. However, the global economic crisis and a flood of new supplies resulted in the subsequent collapse of prices in 2013. Prices had now stabilised and were expected to remain so in the long term.
Molycorp reported negative cash flows from operating activities of $73-million during the first quarter. The average selling prices fell 16% quarter-over-quarter to $30.97/kg.
The company's loss attributable to shareholders widened to $102.3-million, or $0.42 a share, up from $86.1-million, or $0.40 a share, a year earlier.
An adjusted loss a share of $0.28 in the quarter did not reflect inventory impairment charges at Mountain Pass, out-of-ordinary business expenses and certain other noncash items.
Revenue fell more than 10% to $106.4-million.
At the close of business on Thursday, Molycorp’s NYSE-listed stock changed hands at $0.59 apiece. Molycorp’s stock had been trading under the NYSE’s $1 required listing threshold since November, but had in February doubled in value from below $0.30 a share to about $1.06 apiece, before falling back once more.
Last month Siemens selected Molycorp to supply rare-earth materials over the next decade from Mountain Pass for use in its high-efficiency, direct-drive wind-turbine generators.