UPDATE 2-Molycorp loss widens on higher costs, softer rare earths prices
* Q1 loss $0.33 vs loss $0.07 year earlier
* Revenue rises to $146.4 million from $84.5 million
May 9 (Reuters) - U.S. rare earths producer Molycorp Inc said on Thursday that it had a wider loss in the first quarter after higher costs and weak rare earth prices, which it said had declined more in recent weeks.
The company reported a loss attributable to common shareholders of $50.1 million, or 33 cents a share, compared with a loss of $6.3 million, or 7 cents, a year ago. Revenue rose to $146.4 million from $84.5 million.
Molycorp is nearing completion of a $1.25 billion modernization and expansion at its main mine, Mountain Pass, in California. A new processing facility there is expected to reach full production by mid-year, but a "chlor-alkali" plant at the mine that would enable Molycorp to cut costs by recycling some of the chemicals it needs is not due to start operating until later in the year.
Until that plant is online, the company will be unable to sufficiently cut costs. For that reason, Chief Executive Constantine Karayannopoulos told analysts, investors and media on a conference call that the company may cut production at the processing plant.
Produced primarily in China, rare earths are essential for making high-tech products like smartphones, tablets, hybrid vehicles and automotive catalysts.
Asked if the company was considering asset sales, Karayannopoulos said they were not a top priority, but he did not rule them out.
"I'm not saying this is what we are going to be doing but ... you should not be surprised if you find out that in the next few months, as our ongoing evaluation continues, we are slowing down, shutting down, or disposing of assets," he said.
"It is imperative that we closely manage our cash flows," he said. "After we achieve our full production run rate, it may make sense to dial back production until we can run the facility at a lower cost."
Rare earths prices skyrocketed in 2010 and early 2011 as China clamped down on exports, prompting a global rush to secure supplies. China has eased export controls since then and prices have declined.
Molycorp's acquisition of Canada's Neo Materials, which closed in June 2012, gave the miner access to processing capabilities and patents, making it the only major North American player with the ability to both mine and process rare earths.
Weak prices and high costs have weighed on the company's results, and in the fourth quarter of last year it took a $258.3 million impairment charge related to the takeover.
In the first quarter of this year, excluding inventory write-downs and other items, the company recorded a loss of $20.3 million, or 15 cents a share, compared with adjusted earnings of $18.3 million, or 18 cents, a year earlier.
Analysts, on average, had expected a loss of 27 cents a share, according to Thomson Reuters I/B/E/S.