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Molycorp, Inc. Message Board

votingmachine 177 posts  |  Last Activity: Jan 23, 2015 11:16 PM Member since: May 12, 2004
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  • Reply to

    Form 8-K Today

    by lwbd2014 Nov 21, 2014 7:36 AM
    votingmachine votingmachine Nov 21, 2014 10:34 AM Flag

    My bad ... you are right. I read the number for the 2017 notes.

    It reads:

    $27 million in aggregate principal amount of the 2017 Notes and $11 million in aggregate principal amount of the 2018 Notes.

    Adjust all of the numbers I used ... to reflect the $38 million rather than $27 million.

    Nice catch, Thanks.

  • Reply to

    Form 8-K Today

    by lwbd2014 Nov 21, 2014 7:36 AM
    votingmachine votingmachine Nov 21, 2014 10:32 AM Flag

    They continue to pay interest up to the date of the exchange ... no further. This just formalizes that even though interest on those bonds is paid twice yearly, the interest is accumulating continuously. If the exchange happened the day before the interest payment was due, Molycorp doesn't get to keep the interest.

    They are buying debt back at a steep discount, using stock that is priced at a steep discount. It isn't a large amount of bonds, and it isn't a large amount of stock.

    I tend to think the stock is discounted much more than the bonds. There was a thread a short while ago that some of the bonds were trading at 30-cents-on-the-dollar of par value. And we all agreed that if Molycorp had money, that was an incredible discount. Molycorp STILL doesn't have the money to buy back debt. And the stock price is so low that I don't want to see much of this stock-for-debt exchange. If they had $16 million to spare, I would rather they bought bonds with $16 million of cash. But they don't have spare cash.

    My guess is that the bondholders also see the stock discount and are not looking at an exit strategy, but at an equity investment. They get a favorable conversion. If they convert $27 million into 15 million shares, they pay $1.80 per share ... frankly that is a better investment than a bond at 50% of par value due interest and repayment. If Molycorp succeeds at their plan, then I think the bonds are a good investment ... but I think the stock is a great investment.

  • Reply to

    Form 8-K Today

    by lwbd2014 Nov 21, 2014 7:36 AM
    votingmachine votingmachine Nov 21, 2014 9:00 AM Flag

    But this is a good thing. The debt load is lower and the discount is good.

  • Reply to

    Form 8-K Today

    by lwbd2014 Nov 21, 2014 7:36 AM
    votingmachine votingmachine Nov 21, 2014 8:59 AM Flag

    It looks very good. They are buying $27 million of bond par value back for $16 million in share value.

    There is a short term negative. The amount of shares is to be between 15,056,603 and 11,239,436, in order to be at the value of $15,960,000. The ideal for the bondholders is to get 15,056,603 shares at $1.06 per share. They have an incentive to short at $1.20 and cover at $1.06, if they can. If they can sell 15,056,603 shares at $1.2, they can exit with $18 million. If the share price doesn't hit the $1.06, they have to buy some to cover, but nothing is ever exact.

  • Reply to

    Rare earth tax

    by mcp_0 Nov 20, 2014 7:42 AM
    votingmachine votingmachine Nov 20, 2014 12:03 PM Flag

    Say you are making fireworks and selling them to your friends for $5 and to Chinese buyers at $25. And the WTO said the price had to be the same. So you sell to your friends at $25, and later, have them to dinner and hand them $20. You put the cost of the dinner on your expenses as a sales event, and price it at $20.

    You are still doing exactly the same thing, but now you record all sales as at $25, which complies.

    I suppose that if you wanted to control the amount exported, you could also just pretend that your friends offered you $26, so your production naturally went to the higher price, your friend.

    China doesn't want to eliminate the control of RE distribution, or the internal competitive advantage they gain by having cheap domestic RE's. They are going to have to achieve that with WTO compliant policies, and there are ways to do that.

  • Reply to

    Rare earth tax

    by mcp_0 Nov 20, 2014 7:42 AM
    votingmachine votingmachine Nov 20, 2014 11:54 AM Flag

    Of course they will comply. The way to keep the export tax that they are currently going to eliminate is to put a high tax across the board ... and then provide internal tax breaks for companies in China. The net effect is a tax on exported RE's. If they adjust the tax correctly, they can achieve the exact same policy objectives of the tax and quota system that has been ruled to violate WTO rules.

    There is an export tax and quota system they have to scrap. They will substitute a hidden tax system of visible public large taxes, and secret tax rebates and tax credits. Externally, they still sell limited amounts to Japan, at high prices. Internally, they sell at the same high price, but (wink, wink), the taxes collected at sale get given back to the buyer, in "unrelated" tax credits.

  • Reply to

    Surprise Quarter?

    by namvu Nov 13, 2014 1:51 AM
    votingmachine votingmachine Nov 13, 2014 3:15 PM Flag

    I think it is just an over-reaction to the SEC investigation and the repeated class action lawsuits. Smith was a bit too expansive in his CEO sales job, and the SEC investigation and the lawsuits have made the current management wary of consequences.

    I don't think they are in over their heads. It is an easy management job. Dig up rocks. Add processing. Sell the minerals. The rocks are a good solid economical grade. The uneconomical part is the processing, which has to be delivered at the designed output and costs.

    Project Phoenix has been poorly delivered. And Smith used to make overly grandiose statements on the imminent over-delivery. And that brought the SEC down. I think they need to realize that FACTUAL communication is always defensible. They can release production information. They can release facility minor milestones.

    At the Q2 CC, they told us the July production, and indicated it was going to remain at that low level, due to hydrochloric acid, and due to the leaching system bottleneck. There is nothing wrong with statements of fact ... July production was at May levels. Hydrochloric acid is expensive. Leaching needs more capacity. Chlor-Alkali water purification is not adequate. They've gone way too far with the idea that minimal statements are easiest to later defend.

    But I'm not of the opinion that the mine and processing startup are rocket science. It is just a mine.

  • Reply to

    contact co

    by mcp_0 Nov 12, 2014 3:39 PM
    votingmachine votingmachine Nov 12, 2014 7:51 PM Flag

    I've emailed IR at different times. Sometimes you get an answer, other times not. I've never emailed that the stock market price is too low, although I have ranted that they were screwing up by not communicating results more often. I think monthly production reports should be issued. Just getting quarterly numbers sucks. I think that I own the company, and they just are too secretive.

    By all means email IR. We've just had the Q3 report and now they will clam up for 3 months. There might be a Chlor-Alkali PR. But I kind of doubt it. More than likely we get some dismal Q4 numbers and then wait for the Q1 "boat holiday" numbers. I get highly irritated that they are not giving some regular updates beyond the quarterly reports, which generally have a lot of schedule ambiguity.

  • Reply to

    2107 Bonds .29 cents

    by mcp_0 Nov 12, 2014 1:12 PM
    votingmachine votingmachine Nov 12, 2014 7:44 PM Flag

    That is too bad. But if they had the cash to buy them back, they wouldn't be priced so low. It is also the case that the market on those can be low liquidity and a small amount may not represent the true price placed by dominant owners of the bonds. But yeah, $108 million to buy the entire amount at the current market price ... that would be a great savings.

    They will be able to refi the debt if they can get to a cash flow positive state (including interest).

    But that is the entire problem right there. They have to make money. Of course the bonds are cheap. Of course the stock is cheap. The company hasn't made money. That can't go on forever. They raised cash with an equity offering a year ago, and raised cash again with expensive debt in September. The process of raising money just keeps going. The bonds due in 2017 were just one other cash raise.

    I'm an optimist ... I see the ore grade as good enough, and the technology as simple enough. But the bottom line is that the bottom line needs to be profits, not losses. Molycorp should do nothing other than move to that. There is a tempting price on the bonds, but unfortunately, that is a reflection of the companies results, not a company bond-buying opportunity.

  • votingmachine votingmachine Nov 12, 2014 10:56 AM Flag

    Mt Pass is large and the ore deposits are fairly well mapped, although there is always the chance of a novel finding.

    That old data was a grab sample ... basically a promising bit of rock dug/chipped up. As sarcasticprocessor points out there was a public announcement of follow up exploration. Nothing was ever publicly reported on the follow up drilling.

    There are a bunch of RE veins that are near the major ore body that is the site of the current mine. I recall reading a bunch of stuff a long while back ... I don't recall the sources.

    Possibly Google: Rare-Earth Mineral Deposits of the Mountain Pass District San Bernardino County California

    There are a series of volcanic intrusions that brought the RE minerals into the concentrated surface deposits at Mt Pass. There are veins of ore that are within the Molycorp mineral rights, but so far, there is no reason to prefer them to the current ore body.

    Certainly, an ore with a more favorable basket price would make the economics of processing more favorable. A frequent hypothesis that I have made is that the processing at Mt Pass is a critical technological advantage. It is a $1 billion barrier to entry for any rare earth mining company. If Molycorp survives it will be able to cherry pick the best ore bodies in the world, as acquisitions. If they can get their current portfolio of rare earth processing facilities to profitable, then they have the potential to then grow further.

    Currently the barrier to that is the economic situation of Molycorp: excessive debt and operations at a cash loss. If they can get to operations at a cash profit, the debt load can be re-financed, and the stock price increase provides a "coin" for acquisitions.

  • Reply to

    Slow ramp up

    by sophiahoetmer Nov 6, 2014 11:52 AM
    votingmachine votingmachine Nov 6, 2014 12:58 PM Flag

    Umm. Strong buy makes sense based on what she said.
    2. MCP will not go bankrupt ...
    3. ... this company will make money

    So by her prediction, the company is going to survive and profit. And the stock is at the ALL TIME LOWS. And the last 2 quarters have been awful. Most would say that is an investment basis to buy.

    Now there are PLENTY of shorts on this board that will say her points #2 and #3 are delusional. But if you take those as a premise (as you do with "And with that ...") then I think you have to agree with the conclusion from that premise.

  • Reply to

    Q3 vs Q2

    by votingmachine Nov 6, 2014 12:10 PM
    votingmachine votingmachine Nov 6, 2014 12:50 PM Flag

    I just dug into the 10Q to verify something. There is $12 million investment loss recorded for the quarter. That is a writedown of the Boulder Wind and Power investment. It looks like they are still carrying that investment as worth $8 million (still an asset). BWP looks to be in liquidation, and my guess is that any recovery will be trivial.

  • votingmachine by votingmachine Nov 6, 2014 12:10 PM Flag

    I missed the CC and will have to read the transcript. The presentation and SEC filings are interesting so far.

    Here are Segment Q2 and Q3 basics (with some rounding)
    Resource Segment: .... Q2 ............... Q3
    Amount ................... 974 mt ......... 1085 mt
    ASP ......................... $10 ................ $13
    Revenue ................ $10 M ........... $13.9 M
    Depreciation+ ........ ($17 M) ......... ($17.3 M)
    Net ........................ ($47.3 M) ....... ($48.4 M)
    OIBDA .................. ($30..3 M) ...... ($31.1 M)

    Chem&Ox Segment: .... Q2 ............... Q3
    Amount ................... 1582 mt ......... 1651 mt
    ASP ......................... $31 ................ $26
    Revenue ................ $48.6 M ........... $43.5 M
    Depreciation+ ........ ($3.9 M) ......... ($3.8 M)
    Net ........................... $0.9 M ............ $0.4 M
    OIBDA ...................... $4.8 M ............ $4.2 M

    Mag&Alloy Segment: .... Q2 ............... Q3
    Amount ................... 1383 mt ......... 1551 mt
    ASP ......................... $39 ................ $40
    Revenue ................ $54.3 M ........... $62.7 M
    Depreciation+ ........ ($4.3 M) ......... ($4.2 M)
    Net ........................... $7.6M ............ $9.5 M
    OIBDA ................... $11.8 M ........... $13.7 M

    Rare Met. Segment: .... Q2 ............... Q3
    Amount ....................... 79 mt ......... 104 mt
    ASP ........................... $202 ................ $205
    Revenue ................... $15.9 M ........... $21.3 M
    Depreciation+ ........... ($2.1 M) ......... ($2 M)
    Net ........................... ($1.4 M) ......... ($1.4 M)
    OIBDA ....................... $0.7 M ............ $0.6 M

    This was very much in line with my expectations. The key things that are a bit odd are that they sold some inventory, while producing less. The lower production was expected with the leach expansion not completed until the end of quarter. The higher costs were expected with the hydrochloric acid purchase necessary.

  • votingmachine by votingmachine Nov 5, 2014 4:19 PM Flag

    The cash cost for production increased to $33.80/kg, a 104% increase over production cash costs of $16.54/kg in the previous quarter, largely due to the limited availability of hydrochloric acid needed for production.

    The number for revenue is in line and the number for volume is in line with expectations. Production at Mt Pass was down, but that was expected. The cash cost increase was higher than I expected. I knew the hydrochloric acid story, but the effects were clearly much larger than expected.

    The report is not good, but also not unexpectedly bad. I need to hear the CC to really know how the future is unfolding.

  • Reply to

    Q3 Estimate

    by votingmachine Oct 20, 2014 11:39 AM
    votingmachine votingmachine Nov 5, 2014 4:12 PM Flag

    At a glance, costs I guessed at were far too low.

  • Reply to

    MCP CC

    by contraryj Nov 4, 2014 8:12 PM
    votingmachine votingmachine Nov 5, 2014 4:01 PM Flag

    The CC is on Thursday at 9 am. The release of the Q2 report is after market close on Wednesday.

  • Reply to

    Thursday Opening Bid .90...

    by chinese_confused Nov 4, 2014 11:41 PM
    votingmachine votingmachine Nov 5, 2014 12:22 PM Flag

    Then short it a lot. You have a prediction for a 50% price move. Just short it.

  • Reply to

    Q3 Estimate

    by votingmachine Oct 20, 2014 11:39 AM
    votingmachine votingmachine Nov 5, 2014 9:16 AM Flag

    Here are the estimates I see now:
    Yahoo: ($0.27) per share, $124 M revenues
    Bloombergs: (($0.28) per share, $125 M revenues
    Nasdaq: ($0.25) per share
    Marketwatch: ($0.26) per share

    Those tightened up a bit, with the range of consensus across sites now from ($0.25) to ($0.28). My estimate of $130 million in revenues seems higher than the two analyst estimates. And my costs are probably low.

    There may be questions on the Magnaquenc patents, and that is another thing to listen for in the CC. How the magnetic powder margins and volume are affected by the expiration of the key patent, and how the current patent battles might play out (Japan-China) are still open questions. Economic growth looks good enough to have driven some demand growth, but there is always a crazy car-buying shift with gas price drops. There is a significant time lag for that to hit though.

  • votingmachine votingmachine Oct 27, 2014 10:36 AM Flag

    People ARE trying. It is just very hard to have controlled fusion. We can detonate hydrogen fusion bombs and generate massive uncontrolled release of energy but the process is difficult to do with control.

    I have no idea what Blacklight is doing or claiming. I just read the Wikipedia now and it looks unclear. The claim appears to be a theory on a state of hydrogen that is not really described. It makes little sense as an energy mechanism though. If you could collapse hydrogen (electron plus proton) to a neutron ... that is an energy absorbing step change. Free neutrons decay into an electron and proton and release energy in the process. Hmm. no idea what they are claiming.

    It is relatively easy to convince scientists. Simply put the claimed process into an isolated system and evolve energy, using the fuel source claimed. Scientists would rather see inside the box, but you can also convince me with a black box demonstration.

  • Reply to

    Q3 Estimate

    by votingmachine Oct 20, 2014 11:39 AM
    votingmachine votingmachine Oct 24, 2014 9:49 AM Flag

    I don't think they will see much money from the Oaktree Warrants. The $2.04 ones should not be used until Oaktree wants to hold those shares. The $0.01 warrants are probably exercised. I think that was the case anyway. But that is only about $180,000.

MCP
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