There doesn't seem to be any relief from the continued downward pressure on Molycorp (NYSE: MCP) and other potential rare-earth-mineral miners. Prices have been falling, which has had a huge impact on results, but Molycorp isn't helping matters by continually diluting shares with more secondary offerings.

The latest deal is a debt and stock offering that could raise as much as $517.5 million if the over-allotment is fully exercised by underwriters. The base deal includes $300 million in convertible senior notes due in 2017 and $150 million of common stock, plus potential over-allotments. The offering is a huge deal now that Molycorp has a market cap of $1.1 billion, down dramatically from a year ago.

As recently as the company's first-quarter earnings release in May the company thought it had plenty of cash to complete capital projects. In its earnings release management said, "The Company continues to generate positive cash flow from operations, maintain sufficient working capital to execute on its stated strategy, and its balance sheet remains strong." A similar statement was in the company's fourth-quarter release.

But management's confidence was shaken in the company's second-quarter release saying, "[We] will need to secure additional financing for a substantial portion of our remaining 2012 capital expenditures and other cash requirements." Molycorp's outlook has changed quickly and with prices plummeting there doesn't seem to be an end in sight.

Foolish bottom line
With Molycorp coming to the market again with pockets turned out, there's no way I would buy this stock or any rare-earth miner. The panic related to rare earth minerals was short-lived and it'll be at least a year before we know if Molycorp will generate enough cash flow from operations just to survive. Remember, this mine has been closed down because it wasn't financially viable before.

Molycorp's decline spells even worse fortunes for Avalon Rare Metals (NYSE: AVL) and Rare Element Resources (NYSE: REE), miners who are sitting on land that's becoming less valuable by the day. The rare-earth bubble has burst and I don't see it being filled with air anytime in the near future.

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