Weaker Rare-Earth Metal Prices Widen Molycorp's Q3 Loss

Rare-earth metal miner Molycorp (NYSE: MCP  ) offered some glimpses of sequential quarterly growth with its third-quarter earnings results, but competition within China depressed rare-earth prices, and disappointed investors yet again.

For the quarter, Molycorp delivered a 27.3% decline in revenue, to $149.1 million, compared to the previous year as the company sold 19% more metric tons of rare-earth metals, but at a lower price per kilogram of just $41.18. Last year, Molycorp reported a sale price per kilogram of $45.04.

Overall sales of $149.1 million are an improvement of 9% over the sequential quarter, if you're looking for a bright side, but price weakness in rare-earth metals and its resources segment hampered results. Rare-earth metal average selling prices declined by 23.5%, to $205.82 per kilogram, while its resource segment ASPs dropped by exactly 50%, to $12.51 per kilogram.

Net loss also ballooned higher, increasing to $72.8 million from just $21.7 million in losses in the year prior. This works out to an adjusted EPS loss of $0.43 compared to just $0.19 last year.

Molycorp did manage to rein in its expenditures, with total costs, excluding depreciation and amortization, falling to $150.4 million, from $183.2 million last year. This drop allowed Molycorp to reduce its cash flow burn rate to $16 million, from $34.7 million, in the sequential second quarter, but reduced its remaining cash and cash equivalents on hand to $173.9 million.

Looking ahead toward the fourth quarter, Molycorp estimates that capital expenditures will fall to approximately $60 million from the $69.9 million reported this quarter. With that assumption, cash outflow should shrink again depending on how rare-earth prices react during the quarter. 


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