Wednesday, May 14, 2014

From the Molycorp Earnings Call $MCP

From the earnings call this week:

Michael Gambardella - JPMorgan Chase & Co. - Analyst
Yes, good morning. My question is regarding the cash burn. It seems like the cash burn in the first quarter was more than you expected, more than we expected. Since on the last call you said you would discontinue your talks for bank credit facility. You don't have a bank credit facility, and the cash burn was greater in the first quarter. What is the contingency if things don't improve? Quite frankly, you guys have thought that production was going to be ramping up quicker for several quarters now. What if it doesn't, or what if prices start to go down when you bring the production on andyour cash burn continues, are you forced to raise equity again?

Geoffrey Bedford - Molycorp, Inc. - President, CEO
Good morning, Michael. First of all, from a cash burn point of view,from our perspective the volume that we were anticipating didn't come to fruition. That was the issue why we saw less of a cash positive impact than we were hoping. I think that's what we're really talking about here. The cash position really comes down to the shape and scale of the ramp, which is what we continue to work on. As far as, sort of, alternatives, if and when we need them, quite frankly we are public company.
Paul Forward - Stifel Nicolaus - Analyst
Thanks. Maybe lastly, you speak in your slides here about $61 million of remaining cash capital spending for the rest of 2014. How much of that is locked in? How much ability do you have to economize and back off on any of that spending? Or is that a pretty firm number in your minds?

Michael Doolan - Molycorp, Inc. - EVP, CFO
This is Michael. Of the 61, 40 is roughly Mountain Pass related. I would suggest a lot of that has been earmarked for the de-bottle necking process that Geoff has talked about. The balance across the breadth of the organization, we would have to look at each specifically, but you probably could cut that back by 25% or so. Over all, $10 million to $15 million off the top of my head would be I would say, discretionary. You could squeeze that a bit higher, but right now I would say $10 million to $15 million.


eah said...

Market reaction and analysts' commentaries both illustrate the restlessness, lack of hindsight and understanding of capital markets for financing such projects.

Stock down big since "earnings". Or lack thereof.

Stopped following this train wreck a long time ago.

theyenguy said...

A look at the Finviz Chart communicates tht it would have been wise to establish a short in this stock sometime in the first quarter of 2014, as it lost 36% in the last week.

Rare earth prices have tumbled.

It's only a matter of time before the UK, Europe and the US are involved in a war with the developing China Russia access where Rare Earth Minerals are produced. And then where will the Western powers get the basic materials used in military weapons production?

Probably not from this company.

Anonymous said...

That MCP article is really weak.

Classic, retail investors in the comments section are in love with the stock.

Hello, unsecured notes yielding 25%!! Get out of the stock!!