Molycorp tanks after results

The company hasn’t shown a profit in more than two years.

Colorado-based Molycorp reported consolidated net revenues up 17% year on year and 6% over the preceding quarter of $124 million, while product sales volume in increased 12% sequentially to 3,356 tonnes.

What disappointed investors was a 5% drop in average selling prices over the second quarter to to $36.93/kg – continuing a protracted slump. That compares to full year average selling prices for 2013 of $42.26 per kilogram.

After a $400 million injection in August, the company still has $313.5 million cash in the bank, but reported negative cash flows from operating activities of $28.2 million for the September quarter and capital expenditures of $18.2 million on a cash basis.

Molycorp’s Mountain Pass, California mine and processing plant, which the company breaks out separately from its chemicals, oxides and metals divisions, achieved higher selling prices due to a more favourable product mix, but production at the mine was a huge miss.

Output volume for the quarter was 691 tonnes, a 58% decrease over second quarter production of 1,639 tonnes. At the same time cash cost for production more than doubled to $33.80/kg, compared to the previous quarter. Molycorp blamed the limited availability of hydrochloric acid for the production problems.

Molycorp is a speculators’ favourite and the closely watched stock regularly features among the most active on the New York stock exchange.

By the close of regular trading on Monday some 3 million shares had changed hands with the counter shedding 19.1% after hours hitting a low of $1.14 a share from the close of $1.41.

At $371 million on the NYSE, Molycorp’s value is down an eye-watering 75% since the start of year and nowhere near its peak in 2011 above $70 a share.