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Molycorp Mountain Pass | Image from Molycorp Inc. website
Just two weeks after announcing the near-completion of its $1.25 billion mine expansion, Molycorp (NYSE:MCP) ended the week with a 23% share-price drop.
What happened?
In an announcement on Tuesday, Molycorp revealed some disappointing news, including lower-than expected sales and cash flow year-to-date, Bloomberg reports.
Despite optimistic news in early October, Molycorp is running low on cash.
The company told investors that it will sell $200 million worth of shares in order to further finance its Mountain Pass California plant expansion.
Mountain Pass is currently operating at 55% of the rate forecast in January, Bloomberg notes.
Expansion and modernization work is expected to help the company compete with the world’s lowest-cost REE producers.
In a filing with the Securities and Exchange Commission on Wednesday, the company noted that “selling prices have also been adversely affected by volatility in the rare earth market.”
“While we have not yet finalized our results, we estimate that average selling prices were also lower during the third quarter of 2013, averaging approximately $16, $39, $38 and $213 per kilogram in each of our segments,” Molycorp wrote.
The company also noted that it expected write-downs in Q3, although it retains an optimistic outlook for sales next year.
Molycorp was trading at $5.36 per share by Friday afternoon. It began the week at over $7 per share.
