Friday, November 7, 2014

Exchange On Molycorp Conference Call About Chlor Alkali Facility $MCP

Here is the exchange on this quarter's Molycorp conference call about the chlor alkali facility, a topic that we mentioned yesterday.

Q: And related to this, on an ongoing basis, because you have redesigned this facility, are you making different assumptions about the downtime or maintenance? I mean, is this something that you're going to have to actually physically go back in there and repair the cells more frequently than it was originally intended and has this any impact, again, on your possibility for hitting the ultimate forecast or the timing of it?

A - Geoffrey R. Bedford: Sure. Let me start with the second point around the maintenance. So, what we've done is we have ordered an entire second set of cells, quite frankly. So we will have those on-site, critical spares if you will. We've gotten very good at pulling this unit down over a short period of time, we're talking one or two days and being able to flip old cells out, new cells in.

We're not expecting that this is something that we'll be have, that we're going to have to be doing every few months. But we want to be prepared in the event that there is something that we see going on in the cells that we can pull those cells out and put new ones in. So, that's the answer on the first question with the maintenance.
A correspondent writes, "Notice how all the comments about meeting spec consistently, 'we’ve got the process figured out' are all made in the future tense. Seems fair to infer that they haven’t got it 'figured out' yet, at least from the perspective of their customers."
Q - Steve Salemy: So, I guess, to summarize, financing provides you a runway and you have a business plan in place and an operating plan in place that is going to get you to where you need to be at a pace that you think is appropriate.

A - Geoffrey R. Bedford: …what we really need is consistent quarter-over-quarter production that we can count on because taking it back to the fundamental strategy of what we're trying to do here, our view was that the rare earth market wanted stability in supply and price visibility and all those types of things. And we can provide that. But we can only do it if we have products coming out there that are in spec consistently that we can count on. And if we can demonstrate that to the market, that's the end game here. And when we do that, we're going to see that, I think we're going to see a very positive reaction from our customers. So, I hear and I understand why we need to be thinking about next quarter and the quarter after, but the long-term strategy really is here for us to be able to talk to customers and demonstrate. We've got these process figured out. You can count on it, and now let's talk about volumes and supplies and pricing, et cetera. So, that's where we're trying to go here.
Molycorp is what I call a "science project" stock. There's a lot of figuring out to do. The problem is they are figuring out with very expensive debt, when figuring out really needs to be done with equity.


eah said...


Recent Einhorn/Greenlight Capital presentation.

CP said...

Thanks for posting.

We need (and should expect) a euro crisis again. The long bond to a 2% yield!