May 10, 2012 (Source: Reuters) — Rare earth miner Molycorp Inc (MCP.N) posted a sharp rise in adjusted quarterly profit on Thursday that topped analyst forecasts as both realized prices and sales volumes climbed.
Greenwood Village, Colorado-based Molycorp said it had started up the new mill, separator and tailings facility at its Mountain Pass rare earth mine in California.
The company, which turned in a small net loss on Thursday on one-time items, is currently mining rare earth ore at a rate of 2,800 tons a day, four days a week.
Rare earths are used in consumer products as diverse as Apple’s iPhone and Toyota’s Prius and require extensive processing in order to take them from rocks in the ground to a material that a technology company can use.
“We will be producing rare earth concentrate as a result of all of these portions of the facility starting up,” Chief Executive Mark Smith told Reuters. “In terms of mining operation, this really means that you’re ready to go.”
Molycorp will stockpile some of that concentrate as feedstock for a separation plant at the mine site scheduled to start up later this year, while it process the rest at the mine’s old facilities and at Molycorp’s separation facilities in Sillamae, Estonia.
Shares of Molycorp, which posted its results after the close of regular trading, closed more than 1 percent higher on Thursday at $25.43 in trading on the New York Stock Exchange.
PROFIT TOPS ESTIMATES
First-quarter adjusted profit rose to $18.3 million, or 18 cents a share, from $2 million, or 1 cent, in the year earlier period. Analysts, on average, expected earnings of 13 cents a share, according to Thomson Reuters I/B/E/S.
Factoring in a one-time foreign exchange loss, an inventory write-down at its European operations and a bad debt charge, Molycorp posted a net loss of $3.5 million, or 7 cents a share.
That compared with a loss of $2.2 million, or 4 cents a share, in the year-earlier period.
Revenue more than tripled to $84.5 million as rare earth sales volumes rose to 719 tonnes from 696 tonnes in the year-earlier period. The company’s realized rare earth oxide price more than doubled to $95 a kilogram from $38 a kilogram.
GROWTH ON TRACK
Molycorp, in the midst of a $895 million modernization and expansion at Mountain Pass, said it on track to produce some 8,000 to 10,000 tonnes of rare earth products in 2012.
The miner expects to achieve its full Phase 1 production rate in the fourth quarter, with output of some 19,050 tonnes a year. Molycorp will eventually produce as much as 40,000 tonnes of rare earths products a year, depending on market demand.
China currently produces more than 90 percent of the global supply of the group of 17 metals. The country has repeatedly clamped down on rare earth exports, which last year sent prices of the individual oxides, metals and alloys soaring.
Molycorp said its $1.3 billion deal to buy rare earth processor Neo Material Technologies (NEM.TO) is on track to close in the second or third quarter. The deal gives Molycorp access to Neo’s rare earth processing capabilities and patents.