Seeking Alpha

Molycorp cut to Sell at Euro Pacific, which cites falling rare earth prices

  • Molycorp (MCP -4.2%) is downgraded to Sell from Hold with a $2 price target, cut from $3, at Euro Pacific, which cites continuous price decreases in special earth elements and lagging production efficiency in Mountain Pass.
  • The firm notes how MCP has decreased its current account, burning through cash by nearly $80M/quarter trying to stay afloat with its price decreases and trouble in Mountain Pass.
  • MCP's Q2 average sales prices decreased to 1,049 tons at $16.8/kg from 974 tons at $10.3/kg in the year-earlier Q2.
Comments (6)
  • eleppin
    , contributor
    Comments (43) | Send Message
     
    puts or calls???
    11 Aug 2014, 01:24 PM Reply Like
  • Skaterdude
    , contributor
    Comments (908) | Send Message
     
    I don't get the bullet point: "MCP's Q2 average sales prices decreased to 1,049 tons at $16.8/kg from 974 tons at $10.3/kg in the year-earlier Q2."

     

    That would seem to indicate that the ASP INCREASED ($10.3 to $16.8/kg). Their cost of production also decreased substantially. I'm not as sanguine about their prospects as I was a year ago, but this doesn't say good things about EuroPacific's quality of research.
    11 Aug 2014, 01:30 PM Reply Like
  • Sarcastic Processor
    , contributor
    Comments (217) | Send Message
     
    Don't be so quick to blame EuroPacific. Seeking Alpha my be due a fair bit of the blame.

     

    Benzinga wrote "Molycorp average sales prices decreased heavily from 974 tons at $10.3 per kg compared to 1,049 tons at $16.8 per kg in the company's second quarter of 2013." "from 974" should be "to 974". So if Seeking Alpha tried to summarize Benzinga, it botched it. I would reserve any criticism of EuroPacific until after reading what EuroPacific disseminated, not Benzinga's summary of it, or Seeking Alpha's summary of Benzinga's summary of the EuroPacific report.
    11 Aug 2014, 02:40 PM Reply Like
  • legalizeMJ
    , contributor
    Comments (74) | Send Message
     
    MCP IS A BUY AT THIS PRICE, imo. (NOT a SELL as Euro Pacific said).
    Because
    1)MCP's cost of production decreased
    2)China has no choice but to raise its rare earth prices (On 8/7, China loses appeal of
    WTO ruling on rare earth export. To win, China has to fight back. There is only one (1)
    way for China to fight back is to RAISE its rare earth prices and THIS BENEFITS MCP).
    3)MCP gets $400.ml in financing from Oaktree Captital (Source: MCP Q2 report,news 8/6) (MCP has $156.4ml
    in cash and cash equivalents as of 6/30. MCP has $156.4ml + $400.ml = $556.4ml.
    This means: THE STORM IS PASSED, THE UNCERTAINTY IS OVER and MCP survives
    and thrives FOR SURE). By the way, its cash = is bigger than its market cap= more than $2.30 per share).
    4) MCP is going to get an UPGRADE soon (About the $400.ml financing from Oaktree)
    and MCP stock will go up higher and higher BECAUSE the short sellers have to BUY MCP shares from YOU at higher prices to cover their short positions.

     

    Again, MCP is a STRONG BUY due to the reasons above, imo.

     

    (Note: The shares short is 66,774,350 shares. Euro Pacific was trying to help the
    shorts. Euro Pacific "forgot" to mentioned about the $400.ml financing from Oaktree.
    Why "forgot" on purposes ?)
    11 Aug 2014, 09:09 PM Reply Like
  • eleppin
    , contributor
    Comments (43) | Send Message
     
    thank you
    12 Aug 2014, 09:26 AM Reply Like
  • Molycorp52
    , contributor
    Comments (17) | Send Message
     
    Who is europacific?
    12 Aug 2014, 07:27 PM Reply Like
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