China has done quite a lot to shore up RE prices. Production idled. Show arrests against smugglers. Appealing the WTO decision. Buying RE's for a national stockpile. Those are all to push RE prices higher.
And of course I am in complete disagreement about the potential for bankruptcy. There is really only ONE large debt that is not converting into stock. I think MCP will turn the corner, and eventually turn profits. Most of the loans they have will convert into stock over the coming years, leading to a larger stock ownership, of a much less debt-burdened company.
LOL. They didn't win. The idiot rancher managed to get a bunch of other dangerous idiots around him. There is no reason to pursue a risky arrest now. All the amateurs will go home and in a week Bundy can be arrested, and any illegal cows can be rounded up.
The BLM isn't interested in a war. They've told him to move his cows for 20 years. I think they can wait a little longer. That already shows some patience.
It is funny to see the wingnuts treat him as some kind of oppressed hero, ad the BLM as oppressive #$%$'s. He's a guy who DOESN'T own the land he puts his cows on. Fully admits he doesn't own the land. But claims a right of forage rental, based on long family use. He WANTS to pay rent to the county, and has tried before. The fact is that he doesn't have a lease, and he has been told to stop using that range. After 20 years, the BLM decided to just move the cows.
The law is on the BLM side. Bundy is on the wrong side. I feel bad for him, but as I see it, he is wrong and the BLM is right. He claims a legal right to use the land, but that right is not upheld in court.
Bundy really managed to get the idiots riled up. But I read absolutely nothing (and I read the whacko side) to support his claim that he gets to use that land. Some claim the land should be sold from the federal government to the state government as a policy (Utah has the same running argument with the Fed side). But no one claims it is Bundy's land. And no one other than Bundy claims it is his right to use it.
A cynic would point to the shares being sold by board members and wonder who suggested a dog-and-pony show ...
But since the interests of the insiders and myself coincide, I am willing to look beyond any blatant attempt to drive the stock value higher. It is big of me, but I can be that way sometimes.
EVERYONE has an investment bias. And people tend to argue to support that investment decision.I assume that. It really is not anything useful to dismiss everyone as either helplessly deluded as a long or as a short. Some are deluded. Some are useless idiots. The market is full of all types. EVERYONE is biased.
What you are saying is a good argument for YOU to not read or post. You gain nothing but a tally of who is invested long or short. You know your own comments are biased ... why bother?
I also see no point in anyone claiming a record with any investing. Sometimes you are right and sometimes you are wrong. No one is perfect. And few people understand the statistics necessary to actually conclude investment performance at a significant level away from the average.
That might explain it. They all seem highly interconnected, and individuals are also with the investment companies. The list was from the SEC filing, and there are a lot of notes ... perhaps I missed some of them.
I'm not making any predictions. I was taking note of the board membership connections. I knew Bhappu was gone, and as he and RCF move on to other venture capital projects, they are selling some shares. I do have to wonder if Molymet will buy a block.
I take it as a sign they are making progress on both the production rates and on the optimization. They could show off a brand new facility that is 75% idle, but that is not as likely as showing analysts around a smoothly running, high-capacity, brand new facility, with a story about the (dropping) operation costs as the future path.
The Q1 report will be before that tour. My guess is the week before. They will have some updates on the operational progress. They announced Chlor-Alkali commissioning a month ago. The final cracking stage was commissioned in December. They could ramp to do high-production-rate debugging. If they have done some of that ... that would explain the tour announcement. If they know they can run at capacity, and run reasonably smoothly, they can have a tour that really shows off. They can speak to the economies of scale, and to the future optimization plans.
No info on sale methods or timing.
I think there is no sale yet, so there can be no insider trading. And the notification may be an advance statement that indicates they will do something in 30 days or so. But two of the sellers are on the board, and the rest are indirectly connected to the board. And it is a lot of the company, over 10%. The process has to be clear of any insider trading.
I just wondered what that means. Knowing it is not going to be an illegal insider sale (duh), what does that imply?
I am not attributing any negative motivations to the sale. Just considering a different view of the sale process.
I am not really put off by the sale. If you have a theory ... spell it out. I am especially curious why the shares offered total doesn't add up to the same number as in the news.
I think the corruption is in the party officials. These aren't a small criminal smuggler ... corrupt local politicians.
Your math on sales makes sense except you've left the sales that are not closed at the end of Q1 out. If they had 367 tons ordered but not delivered or paid at the end of Q4, and they have a different 367 tons ordered but nit delivered or paid at the end off Q1, then the numbers go up for the Q1 sales percentage.
Every company tries to make the quarter by booking sales at the very end. And they also try to delay purchases at the end of the quarter. Sometimes you get lucky and pull an order forward and sometimes you get unlucky, and see all your customers delay to make THEIR quarter. On the one hand, Lynas wanted those sales last quarter. But on the other hand, they will see those sales in Q1. The tricky thing is whether there is advantage one way or the other in Q1. Better to just assume a steady state of lost and gained sales from the calendar games.
Without a lot of track record and with little to go on ... the sales numbers have the potential to be a bit misleading. Could be either way though. The ASP and the RE mix are good things to keep in mind, as you point out.
How does the sale of shares by insiders work with the board membership?
Here is the share sale from the prospectus:
Resource Capital Funds . . . 12,343,863 to sell . . . 4,416,666 remaining
Pegasus Capital LLC . . . 10,611,127 to sell . . . 747,1786 remaining
Traxys S.à.r.l. . . . 2,641,543 to sell . . . 747,178 remaining
Alan Docter . . . 3,075,584 to sell . . . 833,236 remaining
Mark S. Kristoff . . . 3,075,584 to sell . . . 854,808 remaining
That totals 31.74 million shares, which is higher than the 23.82 mentioned in the press for the insider share sale.
Currently on the Board:
Brian Dolan: Resource Capital Funds
Mark Krystoff: Traxys
Alan Doctor is with Traxys, but is not on the Board. Pegasus sounds like it is completely interconnected with Traxys.
Since the share sale is by any means legal, that has to include the rules for insider trading. The current members of the board have insider knowledge of the Q1 results ... the share sale was announced April 1st and we are about a month from the Q1 report.
There is $5 million of debt conversion in this share sale. That debt is converted into shares at $12 per share.
Also, is there any connection with Molymet? Molymet currently hold 46,700,700 (of 244,699,258 outstanding), about 19.1% of MCP. There is a recent story about Molymet issuing $244 million of bonds ... and the speculation was some of the cash was to buy more MCP. Molymet is currently limited to 27.5% of all stock ... 67,292,295 shares. They can buy another 20,591,595 shares. That is close to the 23.82 million. number. It is possible that the conversion of debt to new shares, the conversion of preferred to new shares, new shares as compensation, etc. ... that there is another few million shares. And Molymet can basically buy over a quarter of the total.
Any thoughts? Can anyone explain the insider trading aspect? Why don't the shares add up to the right amount? What does it all mean?
Molycorp is not offering stock ... they are assisting an insider sale. Looks like the shares are now able to be sold by Resource Capital Funds and their partners. They can sell any way they want that is legal. Blocks, contracts, open market, deals with shorts, options, etc. So the shares are not "offered" at a price. They are available for sale and the market price was the price of the moment.
If they are smart they will figure out an options plan to sell them. Options give them a vehicle without saturating market demand. The shares HAVE to hit the market at some time and some price.
Purely as speculation ... do you think any of the shares are already sold short, or short against the box? The short interest of 67 million shares is pretty high.
I see one thing. The offering is by Resource Capital Fund ... not MCP. MCP is just putting the prospectus and stamp on a major sale.
I'm puzzled by the two SEC filings for today. A 424B7 and an 8k. I don't have time to go thru these until later. I'll check this thread in an hour or so ... anybody that can read, and offer a quick opinion ... thanks.
MCP IPO'd less than 4 years ago. As a public company Molycorp will turn 4 years old on July 29th, 2014.
But I like the new highs in 5 years thinking ...
I think that the Lynas model makes sense, but only via acquisitions. Lynas mines ore, processes it to concentrate and ships that. Arafura is a $34 million market cap. There is less advantage to them building an entire processing complex, and more value in a company like MCP buying them, building the mine and concentrate faciities, and then shipping concentrate to assorted MCP facilities: Silmet Xibo, even Mt Pass. MCP ships their LREC (light RE concentrate) to Silmet and Zibo. The bottom line is that a promising ore body is worth those tens of millions, but the construction of a billion dollar facility for every $30-million ore deposit makes little sense. MCP is currently a $1.2 billion market cap company. There is more value in adding Arafura to an existing processor than to it building alone.
I don't see the value in MCP contracting processing. The premium just can't be large enough to compensate for the construction costs. And quite frankly, the right business answer is not cooperation, but crush them, and buy the best values.
I don't see any way for current ore bodies to be developed. The money Molycorp raised during the RE price spike can't be easily raised now. If anything, there are giant red flags that business plans for RE's generally look worse as time goes on.
Here are some things I see:
5 analysts. $144 M revenue. -0.23 EPS
6 analysts. $144 M revenue. -0.21 EPS
4 analysts. -0.18 EPS
4 analysts. -0.21 EPS
I can see that revenue and loss as reasonable ... here are my first cut estimates:
Resource . . . . . 1100 x $10.5 ASP = $11.6 million revenues, $50 million loss, ($11 million d&a)
Oxides . . . . . . . 1800 x $31.5 ASP = $56.7 million revenues, $5 million loss, ($6 million d&a)
Mag+Alloy . . . . 1400 x $44 ASP = $61.6 million revenues, breakeven, ($7 million d&a)
Rare Metal . . . . . 75 x $200 ASP = $15 million revenues, $5 million loss, ($2 million d&a)
Then interest costs another $15 million.
The net is $75 million as a GAAP number, but the commonly used number excludes the $26 million of depreciation. A loss of $49 million is about $0.2 per share.
They had $314 million cash on 12-31.
-35 million cash burn from Ops
-15 million interest
That leaves $249 million cash on hand at the Q1 end. Similar cash burn every quarter would run thru that in another 4 quarters. That is a pretty big window to turn things around, considering that a turnaround starts with smaller losses as they incorporate the Chlor Alkali facility into operations.
They need to have the revenues. Q4 revenues were just awful. At this point $144 million revenues is a small but positive step. With the Chinese holidays, I hope they hit those revenue numbers. Ideally they also report the state of operations as of the May reporting date, and can say they are ramping nicely and cutting costs nicely. At that time they will have about 2 months of Chlor-Alkali operation info.
The new numbers from Arafura underline the value of the new Project Phoenix processing facility. As Arafura struggles to put together a business plan, they keep tweaking their plan to get better numbers on the cost. They released a new set of estimates on 3-20-14, available on their website.
The new plan calls for:
CapEx is reduced from $1.912 billion to $1.408 billion.
OpEx is reduced from $20.55 per kg to $15.67 per kg.
Project Phoenix was over budget and behind schedule, and has yet to make significant strides towards the OpEx goals. But it is done, and lower OpEx goals are still considered a realistic target.
Arafura is commonly considered a prominent candidate for possible start-up, although well beyond the MCP and Lynas timeframe. The reality is that they are still formulating a plan, and then when it is developed enough, they will raise capital to fund that business plan, then still have the delays and cost over-runs that large projects have. And they are starting with a much higher OpEx cost basis to slip from.
I still think the ultimate fate of the better resources is as acquisitions by the established processors. MCP is close to being an established processor. The completion and commisioning of Chlor Alkali last month was the final large piece in the puzzle.
Q1 reporting is typically early May. I was surprised by the March 3rd report because it was a Monday, rather than a Thursday, and it was a bit earlier than past Annual reports were. I would expect the Q1 results around Thursday 5-8. But the Annual report raises the possibility of a Monday 5-5 report.
Either way we are about a month from the Q1 report. I haven't looked at the surrounding situation enough to make any predictions. Q1 is always a bit more difficult as the Chinese holidays and calendar affect the results from the China side.
The Lynas ASP that they released was promising. RE prices were remarkably flat for Q1, down slightly from Q4. I'll take a look at estimates and make some guesses later. We have about a month to make our guesses ...
Obviously all the money instantly disappears and the stocks get traded for pennies. That happens for everything. We will see instantaneous deflation to $0 for everything.
NO ONE wants hyperinflation. But there is a serious argument for moderate inflation. Not everyone agrees about low level inflation, but everyone agrees that hyperinflation is bad. The incidences of hyperinflation are based on pure money printing. The actual FED policy is slightly different. The FED is creating money and buying treasuries with it. This is not the German/Zimbabwe model of printing paper money and using it to fund government operations.
The money supply increases, but in a reversible manner, and the money is not being spent to fund government operations (although the low interest rate lowers debt servicing costs), but is used to remove the (fungible) safe investment base, and push money towards bank (low interest) lending. A cheaper capital cost should drive business investment, increasing economic growth.
A lot has been made of the obvious capital shift into stocks. This is important, but I think the bubble talk is a wild exaggeration.
Currently inflation by the historic metric is low. Some think the historic metric is out of date ... could be, but it is transparent price measurements. It really would be advantageous to the economy if inflation jumped to the 5% to 10% range. That incentivizes the immediate purchase, and adds to short term economic growth. RE's have been in a LONG cycle of price deflation. The last several months have seen nearly flat prices ... even some slight increases. That is an encouraging development and it needs to continue for RE consumers to feel comfortable about carrying any inventory.
But again: NO ONE wants hyperinflation.