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Molycorp, Inc. Message Board

votingmachine 166 posts  |  Last Activity: Sep 18, 2014 11:46 AM Member since: May 12, 2004
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  • votingmachine votingmachine Jun 22, 2014 4:12 PM Flag

    I don't see how we won't see the number in the next report. They may be unable to comment on it, but the numbers have to add up. The cash balance at the end of Q2 (reported) has to be the Q1 cash balance minus the losses in Q2 (reported) plus the cash settlement (unreported).

    If the question is asked, they may have to all but answer it, as the report will show the number, even if they can't say it came as the lawsuit settlement.

  • Reply to

    Settlement on mcp website

    by molypooperpumper Jun 19, 2014 11:57 AM
    votingmachine votingmachine Jun 22, 2014 4:40 PM Flag

    I used the number $150 million and it was purely from memory. I would say that if cuiosity has checked it, rely on his number. Or better yet, find the number in official documents.

    $37 million is still a big chunk of cash to be split somehow.

  • Reply to

    Settlement on mcp website

    by molypooperpumper Jun 19, 2014 11:57 AM
    votingmachine votingmachine Jun 22, 2014 4:47 PM Flag

    I found this on Miningdotcom:

    Molycorp Inc. (NYSE:MCP), one of the only non-Chinese producers of rare earths, has sued the engineering company responsible for designing the chemical processes at its troubled Project Phoenix for over $45 million in damages.

  • Reply to

    When will the huge dilution take place ?

    by grleroy Jun 21, 2014 1:43 AM
    votingmachine votingmachine Jun 22, 2014 6:39 PM Flag

    When they see they need it. The last offering was with a between $100- $200 million on hand (strictly IIRC). They started Q2 with $236 million. My guess is that the cash drops $50-$60 million or so. So the question will be whether they think that level is adequate or not, and that will depend on the path they project going forward. If they expect to have diminishing losses, (say they project Q3 at $40 million cash burn, Q4 at $25 million cash burn, Q1 at $10 million cash burn and Q2 at profits) ... then they have a very low need for raising cash, and a better chance at a better raise later anyway.

    No one has any idea of the actual path for Mt Pass operations, which are the drive of losses. We all see the continuous prediction that the cost side will get better, but not much progress on that. And that projection is precisely what you need to determine a cash need or timing.

  • Reply to

    When will the huge dilution take place ?

    by grleroy Jun 21, 2014 1:43 AM
    votingmachine votingmachine Jun 23, 2014 12:13 AM Flag

    Nd/Pr prices don't look down. And yes they can make money just in the Nd/Pr sales.

    At phase 1 levels they produce about 20,000 mt of total RE's. 16% is Nd/Pr ... so about 3,200 mt. They plan a cost of $7000 per mt, so about $140 million for the 20,000 mt.

    If Nd/Pr is at $50 per kg, the revenues from the Nd/Pr is $160 million. And Nd/Pr is currently much higher than that. Somewhere between $75 and $100, with demand growth strong.

    They have to hit the cost reduction target and the volume target. They will then make money on Nd and Pr. It is just simple math, based on the costs and market price.

  • votingmachine votingmachine Jun 23, 2014 9:06 AM Flag

    Good point. I guess it might be a Q3 item. It is irritating that the dollar amount (if any) is not available.

  • votingmachine by votingmachine Jun 23, 2014 10:10 AM Flag

    Q1 is always the worst demand side for RE's. There is some seasonal and holiday effect in China that is a bit puzzling. The February export number sticks out in this most recent report on China's exports:

    Jan . . . 5210 mt
    Feb . . . 3070 mt
    Mar . . . 5180 mt
    Apr . . . 5620 mt
    May . . . 5160 mt

    Basically February is 58% of the 5290 average for the other 4 months. If the same demand side depression was in the MCP sales, then the numbers would be:

    . . . . . . . . . . Resource . . . . . Chem&Ox . . . . . . Mag&Alloy
    Jan . . . . . . . . 383 . . . . . . . . . . . 747 . . . . . . . . . . 533
    Feb . . . . . . . . 222 . . . . . . . . . . . 432 . . . . . . . . . . 308
    Mar . . . . . . . . 383 . . . . . . . . . . . 747 . . . . . . . . . . 533
    Total . . . . . . 988 . . . . . . . . . . . 1926 . . . . . . . . . . 1374

    Without a slow Feb, the total would be:
    Total . . . . . . 1149 . . . . . . . . . . . 2241 . . . . . . . . . . 1599

    That is a 16% net difference between 3 average months, and 2 average months and a slow February. Obviously they need demand strength even beyond those levels, but the China numbers show once again that there just is a bad thing that happens every Q1. 16% more would have put the revenue at $138 million ... more or less in line with expectations.

  • Reply to

    Seasonality

    by votingmachine Jun 23, 2014 10:10 AM
    votingmachine votingmachine Jun 23, 2014 10:16 AM Flag

    It is worth noting that the China export numbers for 2014 are up significantly. The average for the last 5 months in 2013 was 4510 mt per month exports. The 5 month average for Jan-May is 4848 mt per month.

  • Reply to

    Seasonality

    by votingmachine Jun 23, 2014 10:10 AM
    votingmachine votingmachine Jun 23, 2014 10:27 AM Flag

    I don't subscribe to Metal-Pages so all I see is the headlines:
    China praseodymium oxide exports up 33.89% in Jan-Apr 2014
    China neodymium metal exports down 62.92% in Jan-Apr 2014

    Unfortunately, the oxide/metal splits in exports are something that matter in these. The 5 month RE metal exports were 2508 mt per month from Jan-May and 2260 for Aug-Dec. But the amounts of oxides and metals for each element are not in the data I see.

  • Reply to

    Seasonality

    by votingmachine Jun 23, 2014 10:10 AM
    votingmachine votingmachine Jun 23, 2014 10:29 AM Flag

    Oops, left a headline out:
    China neodymium oxide exports up 74.92% in Jan-Apr 2014

  • Reply to

    Seasonality

    by votingmachine Jun 23, 2014 10:10 AM
    votingmachine votingmachine Jun 23, 2014 1:09 PM Flag

    FWIW, Here was my pre-Q1 prediction:

    Resource . . . . . 1100 mt x $10.5 ASP = $11.6 million revenues
    Oxides . . . . . . . 1800 mt x $31.5 ASP = $56.7 million revenues
    Mag+Alloy . . . . 1600 mt x $44 ASP = $70.4 million revenues
    Rare Metal . . . . . 75 mt x $200 ASP = $15 million revenues

    That was based on the previous few quarter amounts. I knew the Q1 seasonality effect but went with the prior quarter trends.

    One thing to be cautious in considering where we are currently is that the Mt Pass resource output should be rising each quarter, but we don't know how much. Q2 numbers should be better than Q1, due to the Q1 numbers being a little worse from seasonal effects. And Q2 production should be increasing, which will be good longer term, although the ramp can also negatively effect the economics, if the sales lag by a month. IE, if the April production (520 mt) is sold in May, and the May production (call it 650 mt) is sold in June, and then the June production (call it 750 mt) is sold in July ... then the cost side is growing before the lagging revenues side. Until you hit a steady state, the time between production and sales hurts the bottom line. And of course I understand that the production sold is really the fraction that is not cerium.

    For all of the bears predicting the Q1 results will repeat, the China numbers and the prior history of bad Q1 results should be taken into account. The Q2 results may be bad ... the ramp and time lag of sales will hurt, but they also might signal better results on the way.

  • Reply to

    The next earnings announcement

    by papabearrhf Jun 23, 2014 3:43 PM
    votingmachine votingmachine Jun 23, 2014 5:30 PM Flag

    Estimates are a bit widely scattered right now.

    Nasdaq:
    5 estimates
    -0.21 average. -0.13 high and -0.28 low

    Yahoo:
    4 estimates
    -0.26 average. -0.21 high and -0.29 low
    $131 million revenues

    Bloombergs:
    2 estimates
    -0.25 average.
    $124 million revenues

    Marketwatch:
    4 estimates
    -0.21 average. -0.13 high and -0.28 low

    So call it an estimate for a loss of $0.21 per share, on revenues of $124 million.

    That would be about $50 million for the quarter which would be along with another $10-20 million of CapEx. Cash on hand would be about $175 million. Most of the estimates are for the Q3 losses to be trimmed a little, and the Q4 to be trimmed a little more. Nasdaq has it as Q2 (0.21), Q3 (0.17), Q4 (0.13). ShockExchange of Seeking Alpha fame projects losses of $0.29 per quarter forever. Yahoo has it as Q2 (0.26) Q3 (0.23), Q4 (0.22).

  • Reply to

    China.

    by contraryj Jun 24, 2014 7:40 AM
    votingmachine votingmachine Jun 24, 2014 9:21 AM Flag

    Obviously, you leave out demand growth.

    The models generally show a downward sloping line from the left to right as the current demand curve and an upward sloping line from left to right as the current supply curve. The slope of the lines indicates the elasticity.

    Elastic demand is very flat. It is demand that readily substitutes at higher prices ... Inelastic is very steep, and pays higher prices at lower quantities. An elastic supply is flat ... increasing demand gets met with smaller price increases, the producer can scale back. An inelastic supply is more vertical. Increasing demand cannot be filled, and decreasing demand cannot be scaled back (the classic inelastic supply is something like land).

    You are right that generally, increasing supply leads to lower prices. But no one knows those prices. And if demand is increasing (and prices in Nd/Pr have been rising) then the price equilibrium in an open market is still not predictable. And ... is China an open, free market? NO!

    You also need to consider that there is a future that is different from the current situation. Consider the solar panel prices of $10 per watt a few years back. Governments added demand ... yet the ultimate effect to increased demand was increased supply, and efficiencies of scale that led to the current $1 per watt prices, and demand that is just incredibly high.

    RE prices are strange right now. The China export games have caused a demand side reduction that is not price driven. The initial inelastic demand response was crazy high prices. Things like the Nd magnet in a hard drive were the proverbial "for want of a nail" ... a computer needs a storage drive, the hard drives of the day needed a small magnet.

    Demand is now more elastic, but is also still somewhat reduced because there ISN'T an open free market for RE's. You have to be crazy to not notice that, or to make any plan for RE's without a complete substitution plan. But still, I think demand is increasing.

  • Reply to

    China.

    by contraryj Jun 24, 2014 7:40 AM
    votingmachine votingmachine Jun 24, 2014 9:36 AM Flag

    Yahoo won't post links, but a quick graphical example can be seen at the bottom of this page:
    http www.tutor2u net
    /economics/revision-notes/as-markets-price-elasticity-of-demand html

    replace the spaces with dots.

  • Reply to

    Molycorp Annual Meeting

    by denverdude123 Jun 24, 2014 9:49 AM
    votingmachine votingmachine Jun 24, 2014 10:10 AM Flag

    Wait. In Toronto, not Denver? What is up with that?

  • Reply to

    China.

    by contraryj Jun 24, 2014 7:40 AM
    votingmachine votingmachine Jun 24, 2014 3:57 PM Flag

    What you said was:
    "This output from China combined with 30 K tons from Lynas and MCP will push sales price well below eithers COGS".

    I'm telling you that is an unsubstantiated prediction, not a fact. That does make sense to most people that understand markets and economics.

    It is common sense to predict a price drop with increases in supply. But no one can pinpoint the exact amount of the price drop or the new equilibrium prices. And as I said, if there is also demand growth occurring, the common sense prediction may be incorrect. I don't know the Lynas COGS, but you make a very specific claim on the future price, and I think it is not that clear.

    You make that very specific prediction of a price change to below COGS. And you make that based on one fact: the supply is increasing. That is too specific a prediction from too little knowledge of the market. That remains my argument and it should make sense. Your prediction might be right. I'm just saying increased supply is not enough to go on to make your prediction as conclusive as you phrase it.

    I understand that Nd is elastic. Which is a reason to expect that the price change with increased supply will be small. You need to refresh yourself on how an elastic demand curve effects prices with an increase in supply. An elastic demand will see much smaller price drops with increased supply than an inelastic demand.

    Think of it this way. With inelastic demand, consumers MUST have the product. The reduction in supply leads to rapid bidding of the price equilibrium higher. An increase in supply alleviates a tight demand pressure, and the equilibrium price drops a lot. With elastic demand, consumers have alternatives, and will reduce demand in response to the slightest price increase. And they will increase demand in the slightest supply increase. They can go either way, switching to rare earth, or using substitutes. Increased supply drops the rare earth alternative in price, and they switch to it.

  • votingmachine by votingmachine Jun 25, 2014 11:59 AM Flag

    I went to the Molycorp website === Investor Center === Presentations ... looking for info on the Annual Meeting (I haven't checked that link yet). There is a presentation from 6-4 that I had not seen. A quick excerpt (I'm still skimming it):

    Optimization and debottlenecking efforts are ongoing, and all production processes are working as designed.

    No material technological or process issues seen that would prevent us from continuing production ramp.

    Cash costs continue to decline as production rates increase, onsite reagents are produced, and other cost-reducing technologies ramp up.

  • Reply to

    New (to me) Presentation

    by votingmachine Jun 25, 2014 11:59 AM
    votingmachine votingmachine Jun 25, 2014 12:05 PM Flag

    I've googled for a transcript and can't find one. Anyone that heard the talk?

  • Reply to

    New (to me) Presentation

    by votingmachine Jun 25, 2014 11:59 AM
    votingmachine votingmachine Jun 25, 2014 2:04 PM Flag

    Some other details.

    Slide 18 has the price charts for RE's. It is remarkable how the prices have stabilized over the last year.

    Slide 7 breaks out capacity by segment ... something I had not seen before:
    Resources: 25,000 mt per year (including LREC)
    Chemicals and Oxides: 10,000 mt per year
    Magnets and Alloys: 12,000 mt per year
    Rare Metals: no capacity given. Gallium capacity should be independent and fairly high, but many are co-metals in the ore. As such the capacity will be proportional to Chem and oxide growth ... ballpark it at 2000 mt of tantalum and niobium per year. Rhenium and Indium are much lower amounts.

    Several slides, including #9 and #33 have data on predicted annual growth rates of RE products.
    10% for magnets
    8% for alloys
    5% for catalysts
    Overall 6% to 10% growth per year. Compounded an 8% per year growth rate is a doubling of the market in 9 years.

    Say they were to hit the capacity limits of everything.
    25,000 x $15 = $375 million revenues
    10,000 x $24 = $240 million revenues
    12,000 x $40 = $480 million revenues
    2000 x $150 = $300 million revenues

    Total revenues would be about $1.4 billion per year. A net margin of 20% would be over $1 per share. A net margin of 50% would be close to $3 per share. At Mt Pass the ASP of $15 and Cost of $7 is closer to the 50% margin.

    And of course if demand grows, Molycorp gains with rising prices, increasing capacity, and expanding by buying junior rare earth companies.

    Of course I realize the ridiculousness of projecting $1.4 billion in annual revenues when the last quarter had $119 million in revenues. But that is the future ceiling and it is worth calculating.

  • votingmachine votingmachine Jun 25, 2014 5:24 PM Flag

    I'm not familiar with this situation, but drilling? Drilling goes forward all the time. Most deposits are uneconomical, but some are economical. People drill for copper. People drill for lead. People drill for lots of different low value metals. I'm not sure why exploratory drilling is a sign of excessively high prices in the RE's.

    I'll have to see the story, but I don't buy that mineral exploration indicates too high prices.

MCP
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