Molycorp, Inc. has announced financial and operating results for the third quarter 2012.
“Our production ramp up continues to build to Phase 1 levels at Mountain Pass, and we remain on target for full Phase 1 operations in the fourth quarter,” said Mark Smith, president and CEO. “As we execute our global vertical integration plan, we will continue to see solid revenue from our Molycorp Canada operations, and we will increasingly realize the benefits of Project Phoenix and the ramping of our production volumes. This should result in higher sales and gross margins, and both improved and sustainable bottom-line performance, due to our low-cost production and our access to markets that require high value, specialty-engineered materials.”
QUARTERLY RESULTS – The Company reported consolidated net revenue of $205.6 million in the third quarter of 2012, a 49 percent year-over-year increase and a 97 percent increase over the previous quarter, during which the Company owned the former Neo Materials (Molycorp Canada) for 19 days.
In the third quarter, the Company sold 4,391 metric tons of product across its business segments and realized a gross profit of $10.9 million, compared to gross profit of $82.4 million during the third quarter of 2011. Gross profit decreased from the prior year period as a result of significantly lower pricing and increased production costs, offset by increased volumes. Gross profit during the quarter also was negatively impacted by $33.0 million of out-of-ordinary expenses, primarily related to purchase accounting adjustments related to the Molycorp Canada acquisition and inventory write-downs.
Molycorp’s third quarter loss attributable to common stockholders was $18.9 million, or a loss of $0.19 per share. Earnings decreased substantially from the prior year period as a result of lower selling prices and increased costs, offset in part by increased volumes and tax recoveries related to the settling of certain tax provisions. Adjusted loss per share of $0.05 reflects operational expansion items, out-of-ordinary business expenses, and certain other non-cash items.
OUTLOOK – “We are seeing customer demand beginning to stabilize,” Smith said. “We have customer agreements in place, or are in advanced discussions and product qualification efforts with customers, on sales in excess of our Phase 1 capacity. In the Lanthanum and NdPr markets, we are seeing demand that will move us into Phase 2 production relatively quickly. With cerium, our commercialization of SorbXT products continues to gain traction in the marketplace.”
“Several of our customers continue to work to deplete large volumes of stockpiles. We are seeing signs these customers are coming back into the market, which is very positive going forward,” Smith said.
“With regard to global trends, output from China continues to be significantly reduced,” Smith added. “Chinese government officials are stepping up their efforts to enforce tougher environmental regulation and to curb illegal mining, and these efforts are putting pressure on production. In addition, a growing number of China’s largest producers have either halted operations or are in the process of halting production, including Baotou Steel Rare-Earth, China Minmetals, Chalco Rare Earth and China Nonferrous Metals. Government and industry leaders in China acknowledge that these and other actions are being implemented for the express purpose of stabilizing or strengthening prices for all rare earth products.”
The Company generated $17.2 million of operating cash flow during the quarter, and had $436.0 million in cash and cash equivalents on hand at September 30, 2012. Molycorp’s cash capital expenditures for Q3 were $240.8 million, and for the fourth quarter the Company expects to incur cash capital expenditures of approximately $180.0 million.
