Tuesday, November 11, 2014

Will Molycorp Have A Going Concern Warning As Its Business Deteriorates?

A correspondent writes,

"Seems like the odds of a going concern opinion are pretty good in March. This quarter will be no better than Q3 cash burn wise. The cash to sustain the company from Oaktree is dependent on a level of production that is more than 2.5X the best quarter that they have delivered so far, and they are now walking back all their prior forecasts and talking about a 'methodical ramp.' Seems like there will be a lot of doubt in March that they will make that number and the co is basically out of money by 12/31/15 I think, particularly with a slower sales ramp."
The conference call sounded like this plant is still a science project with a lot of "figuring out" to do - which they are doing with very expensive borrowed money.

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