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Rare earths miner's profits, sales rise as stock price falls
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Ralph Fountain/Las Vegas Review-Journal
Heavy equipment works Oct. 20 at the Mountain Pass Mine. Rare earths miner Molycorp reported high third-quarter sales and profits, but its stock slumped in after-hours trading. » Buy this photo
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Updated: Nov. 11, 2011 | 8:37 a.m.
Rare earths miner Molycorp reported much higher third-quarter sales and profits, but its stock slumped in after-hours trading when the numbers fell short of analysts' estimates.
During the quarter, Molycorp had revenues of $138.1 million and net income after foreign currency adjustments of $42.9 million a share, or 52 cents a share. A year earlier, the company had revenue of $8.5 million and a net loss of $10.1 million, or 15 cents a share.
The difference resulted from Molycorp resuming full-fledged sales of ores stockpiled at its flagship Mountain Pass, Calif., open-pit mine about 15 miles south of Primm. In 2010, the facility had very little activity.
Despite the huge year-to-year increases, and the unusually high 31 percent after-tax margin, the stock sank $3.50 a share, or 9 percent, to $35.20 a share in after-hours trading on the New York Stock Exchange.
Molycorp fell well short of the 70 cents-a-share average prediction by six analysts polled by Yahoo Finance, with the most conservative estimate at 60 cents a share.
Rare earths have properties that allow the manufacture of small and light industrial magnets for use in everything from tablet computers to hybrid cars to precision-guided bombs.
The rising demand for rare earths has driven up prices, prompting Molycorp not only to resume sales but also accelerate by three months the completion of the first phase of its Mountain Pass rebuilding project. However, some analysts have raised warnings that a possible economic slowdown and other mines coming on line could drag down rare earth prices.
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