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The US rare earths producer blamed disappointing results on poor prices and a lack of buyers.
Molycorp, which aims to ramp up production with a $1.25-billion modernization and expansion of its Mountain Pass mine in California, shed 9.72 percent as investors cued to trade the stock on more than double average volumes.
The company reported a net loss of 44 cents a share, or $74 million, compared to a loss of 71 cents a share a year earlier, when it had fewer shares outstanding.
The earnings hit came despite revenues in the second quarter rising to $136.9 million from $104.6 million. Analysts had been expecting a 23-cent-per-share loss on revenues of $157.6 million.
The loss is also a bit of a surprise considering that rare earth prices have been rising in recent weeks due primarily to a crackdown on illegal rare earths in China, the world’s main supplier of the materials used in electronics, permanent magnets, green technology and military applications.
CEO Constantine Karayannopoulos told Reuters that “[t]here was nothing moving, and prices continued to slide through the quarter,” but noted, more positively, that customers are starting again to place orders.
Molycorp’s stock is up 19.6 percent over the past three months and 9.6 percent over the past month, cushioning a year-to-date decline of 29.1 percent. A year ago, the company was trading at $12.90 per share, almost double Friday’s closing price of $6.69.
Prices update
The markets for cerium, europium and terbium were quiet this week as most buyers remained on the sidelines while waiting for lower prices and suppliers avoided selling. Metal-Pages said prices for praseodymium/neodymium, used in magnets and lasers, are showing weakness due to lack of downstream demand, while dysprosium is also being sold more cheaply, at RMB 2,100 to 2,200 per kilogram, compared to the RMB 2,300 to 2,400/kg price range seen earlier in the week.
China continues to probe illegal rare earth mining, saying this week that local governments will launch a three-month crackdown on illegal mining, production and distribution starting on August 15th.
“Market sources estimated that the national campaign is likely to support rare earth prices for both light and medium and heavy rare earths in the coming weeks,” reported Metal-Pages, noting that current production quotas in China are unable to meet demand.
Junior company news
Matamec Explorations (TSXV:MAT) said this week that it received over half a million Canadian dollars from its Japanese partner, Toyotsu Rare Earth Canada (TRECan), to be put towards a feasibility study on its Kipawa heavy rare earth deposit in Quebec. Matamec has so far received C$16.08 million for the feasibility study, which is expected to be released September 4. The $565,769 announced on Thursday is the final payment from TRECan, which under a joint venture agreement is able to acquire a 49-percent interest in the Kipawa property. Matamec plans to provide Toyota Tsusho (TSE:8015) with heavy rare earths for the production of hybrid and electric vehicles.
Montero Mining and Exploration (TSXV:MON) announced updates on the study done on the bastnaesite-rich carbonatite material from its Wigu Hill rare earth project in Tanzania.
“These positive results represent a significant step in advancing the beneficiation process and improving Montero’s economic flowsheet for the extraction of REEs from the bastnaesite-rich carbonatite mineralization,” President and CEO Tony Harwood said. “By reducing downstream reagent consumption costs we are on track to becoming a low cost producer of Rare Earths.”
Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.
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