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Molycorp, Inc. Message Board

votingmachine 215 posts  |  Last Activity: 1 hour 38 minutes ago Member since: May 12, 2004
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  • Reply to

    Over reaction

    by walterjensen3 Mar 11, 2014 4:30 PM
    votingmachine votingmachine Mar 13, 2014 2:10 PM Flag

    I think I was disagreeing with both of you.

    The comment that Walter made:
    "Japan will not allow that to happen IMO."
    and that you disagreed with in:
    Japan does not need Lynas.

    Both those had the assumption that a strategic non-Chinese RE supply from Mt Weld, is EQUIVALENT to needing Lynas as currently owned.

    The US decided it needed GM to continue. And it provided financial help to a new ownership group to keep that company operational. But the vital strategic interest was the continuation of those car manufacturing plants, without regard to the ownership. The owners of the company were wiped out. The GM brand and operations were saved.

    I think Japan cares that Mt Weld is mined and RE's are sold. And the US cared that GM cars are made and sold. But be very careful in connecting the dots between national interests and your interests. They may be aligned ... I simply don't know.

    Walter would be more careful to say:
    Japan won't allow Mt Weld RE production to disappear
    and you could disagree with that by saying:
    Japan does not need Mt Weld RE's.

    You both phrased it in terms of Lynas, which is the public company with financial difficulties, and control of those assets and associated debts. A GM-style assistance doesn't help Lynas or any current stockholder.

    I don't know enough to agree with either of you. I just was struck with the unstated assumption. If it was something you both knew then mark it down to nit-picking from a random source. You are under no obligation to spell out everything.

  • Reply to

    Over reaction

    by walterjensen3 Mar 11, 2014 4:30 PM
    votingmachine votingmachine Mar 13, 2014 12:08 PM Flag

    You are also making an incorrect assumption in equating LYNAS with MT-WELD-LAMP. Lynas is a business that is running out of money. They may or may not be a good risk to put more money into. But if they fail, then Mt Weld and Lamp infrastructure will still exist. Likely a Malaysian business capital would be interested in acquiring the assets in a bankruptcy proceeding, and the current debt holders would be interested in recovery. The actual flow of RE's would be interrupted, but only transiently. As a nation, Japan might prefer that interruption not occur. But as a business matter, the RE supply would still be there, just momentarily idle as it changes ownership.

    New financing almost has to be by offering stock. Current debt holders would not allow secondary claims against the assets. The question is whether the best business course is too declare bankruptcy and use that process to re-start the business in a debt-free manner. Essentially the current stockholders are wiped out. New ownership (possibly private, possibly equity) puts in the new capital, buying the assets, and that money is distributed to the debt holders. Meanwhile if the current management takes it bankrupt, they probably keep it running, and come out of the bankruptcy as the new management.

    If you think Japan has a strategic national interest in the RE supply (they do), you have to be sure that interest is equal to a strategic national interest that coincides with current stockholders. Japan might be a Magic Knight for the employees of Lynas, for the debt-holders, for the management of Lynas, and still that might not be a Magic Knight for stock holders. Be careful about that leap.

    I do not know enough to make an informed opinion, and this is merely a caution based on the logic, not the facts. There could be facts that make the equivalence a correct assumption ... I just don't know the situation. But look at the GM bankruptcy, which was strategically important for the US. And KMart, whch wasn't.

  • Reply to

    Now 5 is resistance

    by silverfin226 Mar 10, 2014 9:58 AM
    votingmachine votingmachine Mar 11, 2014 11:47 AM Flag

    You had a nice run. Right for a day. Take a victory lap.

  • votingmachine by votingmachine Mar 5, 2014 9:52 AM Flag

    I had no chance yesterday to listen ... I was waiting during a surgery for my wife, which went well.

    The bottom line bad news for the quarter continues to be the low revenues. It is hard to make significant money with $123 million in sales.

    Mt Pass production rate is still going to be under the rated 19,050 mt per year for the first half of 2014. Potentially they are on track for 2nd half rate increases. but as they always say:
    "Production rates will be based on sufficient ramp-up, demand and market economics “
    Cost was $24.52 per kg in Q4 ... still high.

    Chlor Alkali is now operating. There is almost $5 million wastewater disposal each quarter. This is projected to be dropped by 70%, so a $3.5 million per quarter cost reduction (although this is proportional to output).

    Q1-2014 expectations are low. They remarked it would be better than Q4 and trends are currently positive. EBITDA positive … will be close in Q2.

    The problem in the Q4 results is the RE market. And that problem is one that can't be beat by increasing production and lowering costs. You can only sell what the market will buy, and in Q4 the market bought squat. There are a lot of positives on the operation front ... Chlor-alkali, ongoing cracking optimization, inventory reductions on the raw material side. But the RE demand side went south.

    Prices are stable, as producers are refusing to produce and compete on lower prices. Molycorp continues to talk that the customers are at low inventory ... but they still aren't buying in volume.

    The projection of cash flow positive prior to interest had a bit of an interesting twist to me. I took that as cash flow positive prior to CapEx and Interest. It almost sounded like they were projecting 2014 as having $100 million of losses ... attributable to the interest payments. I'll have to revisit the comments on that again.

  • votingmachine by votingmachine Mar 3, 2014 5:23 PM Flag

    At year end they had $314 million cash on hand. They plan $85-$90 million CapEx in 2014. Interest will total $100 million. Before operational results they should burn down to $124 million. If they are operting in that breakeven prior to interest then the numbers stay about the same. They must turn the operational results around rapidly.

    The Q4 results don't show any significant step forward in operational results. Hidden in all the losses, the actual cash burn from the quarter was about the same as previous quarters.

    At a glance:
    $123.8 million Revenues
    ($132.4 million) cost excluding DA
    ($30.7 million) SG&A
    ($4.7 million) R&D
    ($8.7 million) other expense
    ($1.4 million) Foreign Exchange

    ($54.1 million) total cash burn

    ($24.9 million) interest expense

    They need higher revenues and lower costs. But we know that. If they cut that cash burn in half for Q1 and move quickly to that breakeven (before interest) then 2014 has enough cash. If they are slow then the cash available will be a concern in the second half of 2014.

    I will have to go thru the numbers more closely. There are things like the $32 million tax benefit in there that have to get taken out to actually look at the actual cash burn. Inventory writedowns don't burn cash, and tax benefits don't produce cash. The numbers are always there, it is just a matter of loing at them carefully.

    I think that at this point I still think the cash available is adequate. I would definitely like it if they say they can defer some CapEx if they need to.

  • votingmachine votingmachine Mar 3, 2014 5:18 PM Flag

    Well you get to hear the CC before market tomorrow. I would definitely not participate in the after hours trading. I don't know why the magnet and alloy sector was as low as it was. I want to hear the explanation of that. I thought they would see some power in that segment ... possibly $30 million more revenues from there than they saw.

    That segment result is disappointing. Certainly, underperformance there is an apt description.

  • votingmachine votingmachine Mar 3, 2014 4:38 PM Flag

    Some things in the non-GAAP breakdown:

    $119.7 million writedown on Goodwill.
    $16.8 million inventory writedown
    $5.4 million water removal
    $9.4 million investment writedowns (I wonder if this is Boulder Wind Power?)
    About $30 million depreciation, amortization

    I was way off in guessing at the magnet and Alloy sector. My guess:
    Resource . . . . . 1100 x $13 x 0.94 ASP = $13.4 million revenues, $46 million loss
    Oxides . . . . . . . 1700 x $34 x 0.94 ASP = $54.3 million revenues, $7 million loss
    Mag+Alloy . . . . 1800 x $43 ASP = $77.4 million revenues, $15 million profit
    Rare Metal . . . . . 100 x $200 ASP = $20 million revenues, breakeven

    What it is:
    Resource . . . . . 1034 x $10.89 ASP = $11.3 million revenues
    Oxides . . . . . . . 1760 x $31.48 ASP = $55.4 million revenues
    Mag+Alloy . . . . 1353 x $43.82 ASP = $59.3 million revenues
    Rare Metal . . . . . 58 x $249.93 ASP = $14.5 million revenues

    IMO, they need to explain the magnet and alloy low volume.

  • votingmachine votingmachine Mar 3, 2014 4:25 PM Flag

    Yep. The results are pretty much in line (at a quick glance). And Chlor-Alkali is operational.

    I'm not understanding the losses yet. There is $120 million reduction in the value of Goodwill ... that clouds the numbers a bit. Magnet revenues look lower than I expected.

  • Reply to

    Back on Dec 10th, this was reported...

    by amfads Mar 2, 2014 10:45 AM
    votingmachine votingmachine Mar 3, 2014 9:10 AM Flag

    Q4-2013 willl have a large CapEx. I think the number was around $70 million planned for Q4. They have only tossed around some numbers for 2014 CapEx. I don't know that they have stood behind any number. I think they have been saying $100 to $150 million, but they have also kept talking about how they could defer the majority of that based on operational progress.

    So the range might be from $50 million CapEx to $150 million CapEx, with the higher number only coming into play late in 2014, if they see RE market growth and see progress on operational results. I expect they will answer the 2014 CapEx question with a little more authority today.

  • votingmachine votingmachine Mar 3, 2014 9:02 AM Flag

    Right now there is so much negative news in the broader market that the MCP specifics are a bit lost.

    MCP does not run into earnings, in general. IIRC most days with earnings have been flat. The analyst consensus for Q4 is nothing great. I think MCP is wildly underpriced (love the Cramer prediction of a triple (but hate Cramer)). But they need to "show me the money". They are reporting the Annual report for 2013 ad 2013 was an awful year.

    The most critical thing is progress on the completion of the processing facility. If they are done, and they can project lower costs, then the future cost side will keep improving.

    There are a lot on this board that always predict the worst. I see the basis for he analyst estimates, and I am predicting slightly better bottom line number, but not with any great confidence.

    I am much more concerned about the Chlor-Alkali facility. If they say it is in operation that is good news. If they say there are problems to resolve that is bad news. That will end up influencing my judgement of the results more than anything.

  • Reply to

    ignore amfads

    by cookie_baking_wanker Mar 2, 2014 12:12 PM
    votingmachine votingmachine Mar 2, 2014 2:42 PM Flag

    I don't think there is any hidden agenda. He is short and makes the argument for his position. Much more reasonably than most shorts. I may disagree but I'm not going to agree that there are hidden agendas, or lies, or misleading.

    He's wrong, of course. But not someone I feel needs ignoring. I don't bother to click on or read anything by Steind76. There is just not any reasonable chance that he will say anything insightful. And there is a large chance that he will say things that are wildly wrong and misleading.

    But there is no reason to ignore all shorts just because they hold the opposite investment position. If they make a COMPELLING argument then consider selling and moving on. That pretty much has only happened one time in my time in the market but there was an instance, Panacos (Yahoo PANC, price is 0.0027). I bought a small bit on impulse after reading a clinical trial result that blew me away. And then I read the short posts, asked questions, did some better research, and sold. I took a small loss, but the shorts were correct on the big picture.

    My position in MCP is neither small nor under-informed. But if I was convinced, or the facts changed, I would be stupid to not confirm and use things that shorts say. I'm comfortable being long. And I'm comfortable not reading Steind76, but I don't generalize that to all shorts.

  • votingmachine votingmachine Mar 2, 2014 12:04 AM Flag

    Good for him. Of course his claim to speak for Ukraine is based on a random selection after some rioters got the President deposed. I'm thinking the current government is a favorable change, from a puppet state of Russia to one that wants to move towards Europe.

    But he is also claiming to speak for Crimea, which is completely incorrect. They want to be part of Russia.

  • Reply to

    Putin is very wise.

    by au_weimar Mar 1, 2014 7:00 PM
    votingmachine votingmachine Mar 2, 2014 12:01 AM Flag

    Thank god you aren't setting policy. There is a chance that allying with the enemy of Russia would perhaps be regarded as entering the war, as the enemy of Russia. And it may have eluded your notice, but Russia still has ample nukes to destroy the US. And in a war next door to Russia, they are likely to win, not lose.

    Ukraine had a revolution and deposed the President. The prior Ukraine President sold there allegiance to the highest bidder which was Russia. He was tossed out. But Crimea really is allied with Russia. It wasn't the money for them. Of course they want Russia to come in and liberate them from the new Ukrainian government. They WANTED Russia as the partner of the Ukraine, not Europe.

    The thing is that Russia wants the Ukraine firmly in their empire. And Ukraine is next door. I just don't see the EU doing more than offering more money. Which will certainly raise the unrest, but won't stop the tanks.

    I'm not seeing an obvious answer. It is easy to say oppose Putin and Russia. But that opposition is really not as important as the Ukraine. World sanctions and keep Ukraine is a bargain they take. And I don't see a winnable war.

    I don't know the answer. Ukraine is a failed state. A bankrupt kleptocracy. It isn't the place you hand out advanced weaponry like candy and expect an army to form that can take on Russia.

  • Reply to

    March 3rd Report

    by votingmachine Feb 28, 2014 3:19 PM
    votingmachine votingmachine Feb 28, 2014 4:27 PM Flag

    I've never set the account up for wire transfers. I might go to an office and see what can be done.

  • Reply to

    Another Q4 estimate

    by votingmachine Feb 18, 2014 6:43 PM
    votingmachine votingmachine Feb 28, 2014 4:25 PM Flag

    I'm going to say I was high on the revenues. Let's back everything off a little bit:

    Resource . . . . . 1100 x $13 x 0.94 ASP = $13.4 million revenues, $46 million loss
    Oxides . . . . . . . 1700 x $34 x 0.94 ASP = $54.3 million revenues, $7 million loss
    Mag+Alloy . . . . 1800 x $43 ASP = $77.4 million revenues, $15 million profit
    Rare Metal . . . . . 100 x $200 ASP = $20 million revenues, breakeven

    Total: $165.1 million revenues, $38 million operating loss, $0.19 per share loss from operations.
    Then call the interest $29 million. The interest and operating loss total $67 million, $0.335 per share.

    That bottom line number seems a bit high ... mostly I am optimistic on the Mag+Alloy numbers, both in revenues and in costs. I think the revenues could be solid and the margin may improve with decreasing inventory of raw materials.

  • Reply to

    March 3rd Report

    by votingmachine Feb 28, 2014 3:19 PM
    votingmachine votingmachine Feb 28, 2014 4:12 PM Flag

    The real bad news is that I've been procrastinating on sticking more money into a trading account. Taxes are close to done ... waiting on one last form. But the return is calculated and I have a cushion in the bank. I was thinking I would get some fresh powder in before earnings. They completely shut me out. A check always takes days to clear. #%!@!!

  • Reply to

    March 3rd Report

    by votingmachine Feb 28, 2014 3:19 PM
    votingmachine votingmachine Feb 28, 2014 4:09 PM Flag

    I'm crossing my fingers. That would be a nice day. Announce a loss in line or larger than the estimates and announce a full commissioning of Chlor-Alkali and the day is a good one for longs.

  • Reply to

    March 3rd Report

    by votingmachine Feb 28, 2014 3:19 PM
    votingmachine votingmachine Feb 28, 2014 3:24 PM Flag

    I thought we had another 2 weeks to the report. Instead we are getting an Annual Report to read Monday.

    Shorts have Monday to cover to avoid being exposed to the market response to the report.

  • Reply to

    Recycled vs newly mined.

    by amfads Feb 28, 2014 3:01 PM
    votingmachine votingmachine Feb 28, 2014 3:22 PM Flag

    OK. It is not ALL a matter of low cost labor. It is also a matter of source specificity.

  • votingmachine by votingmachine Feb 28, 2014 3:19 PM Flag

    Well, well, well. That surprises me. Monday after market close they are reporting. Tuesday is the CC.

    That is shaking things up a bit.

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