Commodities & Metals

Molycorp Earnings Rekindle Fears of the Worst

After the markets closed Monday, Molycorp Inc. (NYSE: MCP) reported its fourth-quarter financial results. The rare earths company had a net loss of $0.39 per share on $116.2 million in revenue for the fourth quarter. That compared to Thomson Reuters consensus estimates of a net loss of $0.26 per share on $104 million in revenue.

These results definitely did not move the needle in favor of Molycorp. In fact, the results give a grim perspective that the company may not be able to make the $1 mark and will have to face delisting by New York Stock Exchange (NYSE).

The implications were further described in the press release from January 2, 2015:

Under the NYSE’s rules, the Company has a period of six months from the date of the NYSE notice to bring its 30-day average share price back above $1.00. During this period, the Company’s common stock will continue to be traded on the NYSE, subject to the Company’s compliance with other NYSE listing requirements. The Company will notify the NYSE of its intent to cure this deficiency.

This is only the most recent woe for Molycorp, and looking back it seems that this is also one of many. The company consistently has faced weak earnings reports. Looking at the same period last year, Molycorp had a net loss of $0.28 per share on $123.81 million in revenue.

Note that this was a $70 stock in 2011, then a $7 stock in 2013, and now a $0.70 stock in 2015. If we look ahead another two years, where is this stock going to be?

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For the fourth quarter, the company reported negative cash flows of $75.8 million, while at the same time, capital expenditures were $23.3 million on a cash basis. Molycorp had $211.7 million in cash and cash equivalents at of the end of 2014.

The Mountain Pass, Calif., rare earth facility produced 1,328 metric tons of rare earth oxide equivalent production, compared to 691 metric tons in the previous period and to 1,034 metric tons in the fourth quarter of 2013. In the fourth quarter, the volume for product sales was 3,149 metric tons, a 6% decrease over the third quarter, at an average selling price of $36.91 per kilogram.

Shares plunged more than a third to $0.49 after Tuesday’s opening bell. The stock has a consensus analyst price target of $1.85 and a 52-week trading range of $0.28 to $5.22.

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