Molycorp has just received a triple whammy from J.P. Morgan ― and it’s partly about the miner being left with unsold cerium. The New York-based analyst team has lowered its earnings-per-share forecast for Molycorp, withdrawn its price target, and reduced its net present value from $5.37 a share to $3. And adds this: “While the equity raise should buy MCP some added time, we think the company’s liquidity position will continue to see significant risks from earnings headwinds, high interest payments and still significant capex levels”.
All those and J. P. Morgan adds another whammy, saying the cuts to Molycorp figures reflect its lower rare earth price forecasts. Once Lynas and MCP ramp to their respective Phase 1 capacities of 11,000 tonnes for Lynas (expected by June 2014) and 23,000 tonnes for Molycorp, J.P. Morgan thinks all rare earth prices will once again move lower as significant over-supply develops in a market that is likely smaller than it was in 2011 (total demand 120,000 tonnes) due to the demand erosion from the price spike that year.
Yea, me too, before that came out even. But that was then. If MCP gets more cash this week, then the price will go up (temporarily) because the fear of BK will be off the table and some shorts will have tocover, and at a higher price, If they *dont* get the cash, the long term trend will continue.