Estimated sales volumes for our four reportable segments, Resources; Chemicals and Oxides; Magnetic Materials and Alloys; and Rare Metals, totaled approximately 3,200 to 3,400 mt as compared to our prior estimate of approximately 6,100 mt. We estimate that sales volumes, before intersegment eliminations, from Resources; Chemicals and Oxides; Magnetic Materials and Alloys; and Rare Metals were approximately 670-740 mt, 1,640-1,820 mt, 1,100-1,200 mt and 140-150 mt, respectively, during the fourth quarter of 2012, compared to volumes of 835 mt, 1,933 mt, 1,527 mt and 96 mt, respectively, during the third quarter of 2012. While we have not yet finalized our results, we estimate average selling prices were also lower during the fourth quarter of 2012, averaging approximately $18-$20, $32-$35, $44-$49 and $144-$159 per kilogram in each of our segments ...
700 mt ... $19 ... $13.3 M
1700 mt ... $33 ... $56.1 M
1150 mt ... $46 ... $52.9 M
145 mt ... $150 ... $21.8 M
That adds to a 3700 mt total. $144 million revenues. I will guess cash costs of $45, or $166.5 million. Say that SG&A adds at least another $33 million. That gets to a loss of $54 million. Taxes, depreciation, etc, will drop the loss by a third or so. Probably a loss of about $0.25 per share ... but could be higher depending on current cash costs and the overhead costs.
Obviously they need to hit the target of 6100 mt (call that $300 revenues) and cut the cash costs.
Those numbers were in the prospectus for the share offering and note offering.
Go to the Molycorp website.
Follow these links:
424B5 (for 1-28)(I opened it as a PDF)
The numbers are at the top of page 5
All I did was take pick a number in the range and do the math. The cash cost is about the same as previous quarters. SG&A is from memory ... so that is really the most suspect of my numbers. You could go back and check some prior quarterly filings. My recollection is that the lowest number is down in the low $20's million range and the high is over $40 million. But memory is the second thing to go. My taxes is a WAG. The junk that changes the operational results can be large. I would not be surprised to see something show up and change the result significantly. The operational loss (including SG&A, IMO) will probably be in that $50 million range.
Since they have telegraphed the numbers, the critical thing is the path forward. How do they go about getting the cash costs down? When will that happen?
Thanks for your work in the post. If they can get production volumes up to the 19,000 metric tons/yr ,( 4,800 metric tons/quarter) at mountain pass and get direct costs down while holding SG&A constant and getting any thing like present pricing, they can do well. Phoenix II can wait.
There are a bunch of things I never know how to calculate with the current situation. They have a sky-high inventory as they've stockpiled quite a bit. If they write down that inventory, that adds a paper loss. And the taxes are a just a bit of hand-waving on my part ... they will be able to carry-forward losses and use them in future profitable quarters, which is a weird way of saying that the losses have an asset value in a future tax filing. Hence you have to count the loss as generating a tax loss carry-forward asset.
Hey, the good news is they will have soon have quite a lot of tax loss carry-forwards ... ouch.
The production volumes also should be higher than just Phoenix phase 1, Silmet should be able to produce 3000 mt of rare earths and 700 mt of rare metals per year ... call it 750 mt of RE's on top of the 4800 mt from phase 1. The Mt Pass mining, cracking and concentrate can feed both with no problem.Silmet has a higher cash cost though, so the processing is not as profitable, although the rare metals are quite nice. Silmet can also use ore from outside the Mt Pass stream, although MCP has always talked that they want to feed concentrate from Mt Pass.
But the Wikipedia entry says they can process Loparite ore from the Kola Peninsula and turn out tantalum and niobium. With tantalum and Niobium prices so high, I like the idea of using Silmet for the rare metals side, rather than as rare earth production.
Yahoo has the estimate average at a loss of $0.26 on $180 million revenues. For 2013 they have a loss of $0.55 on $871 million revenues. The Q4 revenues sound high, although the loss per share looks about the right range.
Q4 was slow. The US GDP slipped backwards and I think the UK has been sliding. China's GDP was up at a 8.9% pace. Japan also shrank 0.6% ... more contraction than anyone expected. RE prices need some economic expansion to drive demand higher.