Dow Jones reported that Molycorp Inc's first quarter loss narrowed due to higher sales volume and a jump in rare earth prices, although the company's adjusted profit and sales growth missed analysts' expectations.
The company, which was formed in 2008 to purchase a California mine from Chevron Corporation, went public last summer and produces rare earth elements such as lanthanum and didymium. Prices of the metals have jumped sharply after China, which controls a vast majority of the market, said it would slash exports of the metals this year. Some analysts have expressed concern about the sustainability of the current boom in rare earths and the valuations of companies seeking to produce them.
The company last month acquired Santoku America Inc for USD 17.5 million in cash, a purchase that allows Molycorp to immediately begin making and selling rare earth alloys for production of neodymium iron boron magnets, which are used in high tech electronics, and samarium cobalt magnets, used in defense and other applications.
For the latest quarter, Molycorp reported a loss of USD 909,000 or 3 cents a share as compared with a prior year loss of USD 7.7 million or 16 cents a share. Excluding stock based compensation, Molycorp reported an adjusted profit of a penny in the latest period. Revenue grew to USD 26.3 million from USD 3 million, helped by higher volume and pricing.
Analysts polled by Thomson Reuters expected a profit of 10 cents on revenue of USD 42 million.
Molycorp sold 696 tonnes of rare earth oxide products, up 65% from a year ago. Average selling prices totaled USD 37.73 per kilogram for the quarter, up sharply from USD 7.13 per kilogram in 2010. The company warned an earthquake and tsunami in Japan may have had a short term impact on market demand in the second and third quarters, although Molycorp said demand should fully recover in the fourth quarter.
The Mountain Pass mine was at one time the world's most dominant rare earth supplier, but mining was suspended in 2002. Molycorp is currently producing 3,000 tonnes of rare earth products, vital for environmentally friendly technologies, from previously mined and stockpiled ore while it builds a new facility.
Following the completion of the facility's expansion, Molycorp sees annual production of about 40,000 tonnes of rare earth oxide equivalent per year in 2013, double the 2012 target.
(Sourced from www.dowjones.com)
