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Molycorp shares soar on narrower-than-expected loss

Published: 12:12 10 May 2013 EDT

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Molycorp (NYSE:MCP) shares were moving up Friday, after the company reported a narrower-than-expected loss and higher revenue as the rare earth producer reaches the end of a $1.25 billion modernization project at its Mountain Pass mine in California.

The Colorado-based producer and seller of rare earth and rare metal materials reported a loss attributable to common stockholders of $50.1 million, or 33 cents per share for the three months to March 31, compared to the same quarter a year ago, which reported a loss of $3.5 million or 7 cents per diluted share.

The company reported a loss of 15 cents per share on an adjusted basis for the quarter, which eliminates the effect of operational expansion items, out-of-ordinary business expenses, and certain other non-cash items, compared to the 18 cents per share adjusted loss reported in the year-ago period.

The latest results are far better than the 30 cent loss predicted by analysts. 

Net revenues of $146.4 million were up on the $84.5 million recorded in the same quarter of 2012, also beating estimates for sales of $137.52 million. 

Molycorp had $404.8 million in cash and equivalents as of March 31, compared to the $609.8 million on hand at the same time the year before.

"Our ongoing production ramp-up at Mountain Pass remains on course, and our increasing production is allowing us to produce for end-use customers as well as provide greater feedstock to our downstream, value-added processing facilities," said president and CEO Constantine Karayannopoulos in the release. 

"On the demand side, we are beginning to see signs of a return to more normal levels of demand as the year progresses."

Speaking in a conference call that followed the release of figures, representatives from the company added that a new processing facility at the company’s Mountain Pass mine is expected to hit full production by mid-year, but that a plant at the same mine that would allow for cost-cutting by recycling some chemicals is not due to start operating until later in the year. The company will thus be unlikely to be able to sufficiently cut costs until the plant is online, raising the possibility of a cut in production at the processing plant.

Shares in Molycorp jumped following the release of figures, with stock rising more than a dollar on the NYSE to hit as high as $6.83 per share in intraday trading from an open of $6.12, a rise of more than 20 per cent.

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