* Q3 adj loss $0.05/share vs Street-view loss $0.07/share
* Revenue up 49 percent at $205.6 million
* Lower rare earth prices, one-time charges hit profit
* Mountain Pass expansion to be completed in Q4 2012
* CEO says expansion cost likely up 10-14 pct
By Julie Gordon
Nov 8 Rare earth producer Molycorp Inc
reported a third-quarter loss on Thursday, as lower rare earth
prices and higher production costs outweighed a boost in output.
The company also said the expansion and modernization of its
Mountain Pass rare earth project in California is on track to be
completed by the end of the year, with some 80 percent of
facilities already operating at their Phase 1 expanded capacity.
But Chief Executive Mark Smith warned that the cost of the
expansion would likely prove to be higher than the $895 million
budgeted, in part due to issues with engineering.
"We will end up spending a little bit more on the project
than what has been advertised. It's going to be in the 10 to 14
percent range, in terms of increases in costs for the project,"
he told Reuters in an interview.
Smith said defective engineering services were mainly to
blame for the cost overruns. The company filed a claim earlier
this week in the Colorado Federal District court against M&K
Chemical Engineering Consultants Inc.
Mountain Pass is expected to produce more than 19,000 tonnes
of rare earths a year at its Phase 1 capacity, with the
potential to expand output up to 40,000 tonnes a year.
Further expansions will depend on customer demand for rare
earths, a group of 17 metals that are essential for technology
items like smartphones, tablets and high-efficiency appliances.
"Obviously, we've got some economic issues going on across
the world, so we are seeing some impact from that," said Smith,
though he added that customer demand is stabilizing.
Molycorp reported a net loss of $15.5 million, or 19 cents a
share, in the quarter ended Sept 30. That compared with earnings
of $45.1 million, or 49 cents a share, in the year-earlier
Adjusted to remove one-time items, the loss was 5 cents a
share. Analysts, on average, had expected a loss of 7 cents a
share, according to Thomson Reuters I/B/E/S.
Revenue rose 49 percent to $205.6 million on sales of 4,391
tonnes of total rare earth and rare metal products.
The miner's third quarter profit was hit by significantly
lower realized rare earth prices and higher production costs.
Also weighing on profit was a one-time charge related to the
takeover of Neo Material Technologies, now known as Molycorp
Canada, and inventory write-downs.