Molycorp cash could get tight in H2, Morgan Stanley says in downgrade

|By:, SA News Editor

Molycorp (MCP +0.7%) is downgraded to Underweight from Equal Weight with a price target of $2.50 at Morgan Stanley, which says cash could become tight in H2 for the rare earths miner.

The firm cuts its 2015-16 revenue estimates by ~40% on weaker than anticipated volumes due to slow ramp-up and sales mix on lower sales of neodymium and praseodymium; management is working to address both, but investor confidence is low given past shortfalls.

Stanley does not anticipate a material improvement in Mountain Pass production during Q2 from the April run rate because commissioning and ramping up of tanks could take one to two months; also, there is risk that new bottlenecks might emerge in the process after leach tank capacity is raised.