UPDATE 1-Rare earths producer Molycorp's stock jumps on financing

Wed Aug 6, 2014 5:03pm EDT

(Recasts with share price movement, more financial details, background)

Aug 6 (Reuters) - Molycorp Inc reported a bigger loss on Wednesday but its shares rose more than 12 percent in after-hours trading after the cash-strapped rare earths producer announced a long-awaited financing.

Denver area-based Molycorp said it has secured a commitment for $400 million in financing from Oaktree Capital Management, a Los Angeles-based fund manager focused on alternative investments.

The company's stock has been weighed down by concerns about how quickly it is burning through cash, and the possibility it may need to issue shares to raise more funds.

Molycorp is ramping up operations at its flagship Mountain Pass facility in California, which it overhauled as part of a push to improve its competitiveness. But in the first quarter Molycorp produced less material than expected at Mountain Pass.

The company said the funding from Oaktree will be available through credit facilities and the sale and leaseback of certain equipment at Mountain Pass.

Molycorp will get $250 million at the close of the financing, with the remaining $150 million available until April 30, 2016 if the company satisfies certain financial and operational conditions.

In the second quarter, Molycorp's loss attributable to shareholders widened to $84.0 million, or 37 cents a share, as sales volumes fell.

That compared with a loss of $71.2 million, or 44 cents a share, a year earlier. The company's number of shares in issue increased during the year.

Revenue fell to $116.9 million in the quarter from $136.1 million in the same period a year ago.

Molycorp said its adjusted loss in the second quarter was 29 cents a share. Analysts, on average, had been expecting a loss of 28 cents a share, according to Thomson Reuters I/B/E/S.

Sales volumes fell 15 percent to 2,996 tonnes compared with the first quarter of 2014, while average selling prices rose 16 percent to $39.02 per kilogram in the same period.

Rare earths are used in high-tech goods from smartphones to hybrid cars, and in recent years some investors have bet that strong demand would boost prices. Prices did spike in 2010 and 2011 when China, the world's main producer, clamped down on exports, but when it eased controls they slumped.

Molycorp's stock jumped to $2.29 in after-hours trade from a close of $2.04. (Reporting by Allison Martell in Toronto and Nicole Mordant in Vancouver; Editing by Leslie Adler and Lisa Shumaker)