The other news that should be important for MCP is arranging a new line of credit. The CC indications were that the bank due diligence was complete and it was back inside the bank credit department to calculate terms. The thinking was that the banks would be ready to write the loan agreement in September or October. No guarantees, of course.
I agree that the unknowns might keep MCP range bound. The thing that would really break MCP to the upside is an indication that the RE market is off the schneid.
Unfortunately the new RE market won't open until October (in China). If they allow futures trading on the export quotas then the futures market for RE's will get transparent, and the market reads will be a lot easier. The fact that there is no single market space with trading prices is a big problem for the RE market. They are certainly going to have internal China futures trading, and having futures contracts can go a long way for businesses using RE supplies.
The 3rd quarter news will be dominated by the Chlor-Alkali completion and commissioning. The construction completion is sometime in September. The commissioning tests take another month. So by the time the Q3 report rolls around (call it October 10th) ... they should be able to lay out the expectations for the cost savings associated with that facility.
They ran at a 15,000 mmt per year rate in Q2 and said they can hit that comfortably. They indicated that faster run rates were a diminishing return as the yield was lowered. As a math example, consider if they are processing 220 mt of 8% ore at an 85% yield. That gets you 15,000 mt of REO's. But say to get the final 19,000 rating the yiled falls ... so now you process 300,000 mt of 8% ore at an 80% yield, to get 19,200 mt. That is a lot more ore for the increase. If the processing run rate drops the yield then you start to throw away a more RE's and you stress the system more.
The technical answer is the final cracking stage, which will physically change the initial form such that the processing is more efficient a higher speeds. I don't recall any commitments bout the final cracking installation. Once they have the Chlor-alkali and final cracking, they have the complete facility with an output of 19,000 mt per year. The prediction on the economics is that by the end of 2013, they will be in "single digit" cash cost. Obviously they have another few $ yet to go from optimization after that.
The things under MCP control are the completion of Project Phoenix and the operational costs. They are on track to completion and on a path that lowers costs significantly. The things that are outside of their control are customer demand and market price. Q3 was awful. That is about all you can say about the price and demand. There are a lot of signs that the market may be improving. If it does then MCP will be poised to supply 19050 mt per year of REO's from Mt Pass, and to supply a plethora of other products.
From CC: Fortunately, early this year, we had made the decision to move forward with final construction and buildouts of the cracking plant [note: temporarily shelved in 2012 to save capital]. We are now completing work in that unit and are installing final instrumentation before launching commissioning and startup operations. Once the cracking process is online, I am confident that we will see recovery rates and throughput necessary to allow us to produce at Phase 1 rates and beyond should we make the business decision to increase production to those levels. Full operation of multistage crack also will contribute to lowering our cost of production.