Sweet. 2.2 million buy. And it is a new position. It might get added to, as it is currently down. Bottom line is that this stock is wildly undervalued.
Whatever. You don't own a 16+ million share position in MCP. Easy for you to suggest there is something wrong with a billionaire not buying. He owns 16+ million shares.
What I object to was the insinuation that there was something unseemly in his selling stock and taking the money. That is not exactly class warfare stuff, it is simply objecting to this bit of complete random nonsense. Bill Gates could also whip out his wallet and fund Molycorp. Just because someone is a billionaire and they don't buy MCP, that is not a problem.
And you missed the point as usual. The accuser generally has to bring facts to back up the accusation. So far the accusation is that Bhappu has failed: "Why have they refused to step up to extend a credit facility to Molycorp? Why have they refused to invest $100s of millions of dollars"
I think that there are a lot of people in the world that accusation could be leveled against. And it would be equally meaningless raised at the Sam Walton heirs, or the Koch brothers, or Bill Gates, or ...
Lifton acts as though Bhappu has an obligation to spend on Molycorp. He has spent on Molycorp and made good money. He owns about 7% of MCP stock. Yes he has a high net worth. And perhaps he eve has liquid cash in his wallet. But he is under no obligation to hold his current shares or to buy more. He is in it to make money. He HAS made a lot, and will make more.
"Why have they refused to invest $100s of millions of dollars of their prior gains to acquire new shares at these life support share levels?"
They own a lot of shares. And they don't want to put more money into the same basket. Bhappu owns over 16 million shares. That is a nice $80 million investment. possibly 4-5% of his net worth ... That is more than most people put into Molycorp.
I brought up the example of Suhail Rizvi who paid $340 million to own 10% of Twitter in 2010, and subsequently bought more. That 10% ownership of Twitter is worth about $3.5 billion today. He took a large risk, investing in a company which could have been a complete bust. And he will undoubtedly take several billion dollars out and put it in new investments across a wider and more diversified portfolio of investments. Twitter is still a high risk company.
Bhappu financed a lot of the purchase of Mt Pass and the original capitalization of Molycorp LLC, the private company. And after the crazy luck of the RE prices exploding, he took some very nice profits. And you and Jack are jealous and think that if he doesn't use his money exactly how you think he should, that is an indictment of him and Molycorp.
Get over it.
And Jack Lifton is not an independent RE analyst.He is on the Board of Directors of Texas Rare Earth Resource, and is spending time bashing MCP and pumping TRER, so that HE can cash in on his TRER stock. Bhappu put up serious money, $110 million. Now he has more money. You seem to have a problem with that. I don't. It is not a crime to make money. It is not a crime to keep your money. Or are you suggesting there IS some crime involved? Because all you sound like is a whiny jealous guy who thinks that a rich guy not putting more than $80 million into a company is an indictment of the company.
You are completely unfamiliar with the transactional fees for gold. You cannot buy or sell at the spot price. You can buy at a large premium and sell at a large discount.
I know the reason for electric usage. But it is not the best conductor. That is just a fact. And the hypothetical gathering together of all the gold into interesting shapes serves mostly to demonstrate that gold is essentially useless. The reason you can entertain the idea is because all you do with gold is put it in a lump and look at it. The occasional electrical usage is a very small amount of gold.
Every element has a set of unique properties. The main summary for gold's properties would be: it is a useless shiny metal that people have been trained to covet.
Gold is not the best conductor of electricity. Silver and Copper are both better.
And if all the gold mined in history were packed together it would not be a cube of 60 feet on a side,. It would be a tetragonal pyramid. I do think the fact that all the gold could be formed into 2 shapes is worth at least $50 per ounce!
It isn't a coal mine or a tunnel mine. It is an open pit mine for rock-like minerals. Black lung is not a particular high risk.
I don't know about naked shorting. Obviously there are circumstances where it is allowed, and I generally guess that high-frequency-trading doesn't bother with borrowing, since the shares are covered in seconds.
I think there is a larger than expected amount of trading in and around MCP. And that trading creates shares to short. With the new shares in the market, there will be more shares to borrow.
The short side is definitely over-crowded. But I don't know that there is any large naked short position. I would doubt it.
I wish you nothing but bad luck. Good luck in posting your wishes for long losses and expecting positive vibes.
The short interest as of the 10-31 transaction close was up to 50,457,609 from 49,614,205 as of the 10-15 transaction close. The transaction date is trade+3 days, so the actual trades cut offs were 10-10 to 10-28. This window includes the share offering at $5, which was extraordinary high volume and presented an opportunity for covering without squeezing at all.
Obviously the next report of short interest will include the higher volume around the quarterly report. Yesterday and today are back to more normal volume.
I had some hope that an offer of 50+ million shares at $5 would fill the short side expectations of covering near the all time lows, but it appears that shorts are still piling on. It will likely take an actual positive earnings report to finally turn the tide and get covering.
The share count after the offering is about 241 million shares. If the new issue was all float, then the percentage of the float decreased, as the share count increased faster than the short interest. There was a reasonable chance that the short interest was getting close to the limit of available shares to borrow. But the share count and float increase probably allows more shares available for borrowing.
Wrong again. They have never gone bankrupt.
At the end of Q3 they had $174 million cash. They raised $247 million in the offering. That adds to $421 million on hand. They plan $60-$70 million CapEx for Q4, and will operate closer to break even prior to interest. I think interest will be under $40 million. So the year will end at over $300 million cash.
How could they possibly need to issue stock in 3-4 months, next January/February?
China was finally testing the new RE exchange last week. When/if that becomes a reality, it will make RE prices much more transparent. Google "rare earth exchange" and click on the news header/link.
"China’s first rare earth products exchange, the Baotou Rare Earth Products Exchange, the first national trading platform of its kind, has been put into a trial run. The exchange will handle spot trading for rare earth products, but will not yet engage in futures.
General manager of the Baotou Rare Earth Products Exchange, Gu Ming said the exchange would help the Chinese rare earth industry to have a bigger say on prices in the global market. He also said it would bring the different production regions closer, raise the transparency of trading prices, adjust long-term supply and demand and stabilize the market."
Your question doesn't make much sense. What happens if they halt operations because they can't meet the payroll ... they go bankrupt. What happens if they halt operations for a landslide ... they clean it up and resume.
You might be asking, what happens when they have no cash? That is generally when you either declare bankruptcy or try to acquire more cash. If they try to acquire cash via share sales, then stockholders get diluted. If they declare bankruptcy then shareholders have a place at the end of the line for recovery after liquidation.
If the cash burn is upsetting to you then you should monitor it. The report the cash at every quarterly report. You could even short the stock if you think the cash burn is "like their (stet) is no tomorrow". That type of burn only leads to dilution or bankruptcy.
Well it does seem to require some sort of time travel to change the past. Most people think that is impossible.
That makes sense as it would get rid of the cerium inventory write-downs. It might not fly with GAAP though. When you declare something waste or scrap, and then later sell it ... my understanding is that is an accounting problem. It can also have tax implications.
I though those comments from CK were just taking a question and showing how the math works. The question seemed to imply that not selling the cerium would raise the costs, without considering the market basket price effect. If all you do is say the costs are doubling, you can miss the situation. I went thru the math once before here, and it is easy to double count the cerium loss of sales ... you already account for the loss of sales in diminished revenue. Don't count it again as a doubled cost.
You can say that Mt Pass produces 10,000 mt per year of non-cerium RE's at $14 per kg, or that Mt Pass produces 20,000 mt of RE's including cerium at $7 per kg, and the cost works to be the same. I find it more confusing to exclude cerium.
Debt service is large. These are the big debt issues:
$650 million at 10%, so $65 million per year interest
$360 million convertible notes at 6%, so $21.6 million per year interest
$230 million convertible notes at 3.25%, so $7.5 million per year interest
I don't think the $650 million is convertible to stock so it will be paid back as cash in 2020 or re-fi'd at a lower rate. If they can get that re-fi'd or paid off early there is potential for interest savings.
In the presentation slides there is an interesting thing that went uncommented. In Q4-2014, they target 23,000 mt per year run rates. The production is always ore quality dependent ... if you can process 300,000 mt in early stages, it matters if it is 10%, 8%, 6%, etc. This could just be a recognition that the ore is higher percent RE's than average for the next cut of Mt Pass.
Nonetheless, at 23,000 mt per year rate, that is 11,300 mt cerium, 7,600 mt lanthanum, 2800 mt neodymium, and 990 mt praseodymium. Selling no cerium, but all the La at $6, the Nd at $80, and the Pr at $110, they would be operating at a $375 million per year revenue point. At $7 per kg costs, they would be operating at a $161 million per year cost level.
Actually the generally considered loss was better than expected. In general, they don't want to look at the paper loss on inventory write-downs. MCP has a pile of unsold cerium. They've certainly talked about that. And that pile is worth less at Q3 price than at Q2 price. And will be worth less at Q4 price than Q3 price. The operational results were pretty good. They reduced costs, and sold more than Q3. They explained the plan again, and it is still a good one.
Molycorp is taking forever to get built and operational. They are losing money every quarter while operating inefficiently. The only question is if they can operate at the efficiency they are targeting when they have a completed, new processing facility.
They once again confirmed they plan to achieve $6 to $7 per kg processing costs. They are a long way from that, at $25 per kg costs. And they are behind schedule on the commissioning of the Chlor-Alkali and final cracking stage. Only a little, but it is once again a slip in the schedule.
Looking at the quarterly loss (which was right in line with expectations) ignores the future potential. It makes for a great stock investment IMO.
Mt Pass volume is going to stay low thru Q4. It sounds like the last bits of the facility will be commissioned soon. But they will not immediately rmp to 5000 mt per quarter. It also looks like they now project higher than 19,000 mt per year from the current facility.
I'm reading the transcript. The cost basis went from $35 in Q2 to $25 in Q3. The key drivers will be full facility operation and optimization. The goal is still a $6 to $7 per kg price for REO's form Mt Pass.
They did address that they remove cerium from the process stream as an impure element that then goes thru purification. So it sounds like they will be able to bypass some purification, which will save a little.