* Adj Q4 EPS $0.41 v Street view $0.41
* Q4 revenue rises sixfold to $132.9 million
* Company warns costs to rise in 2012 on labor, chemicals
* Sees continued growth in demand, tight supply
By Julie Gordon
Feb 23 Miner Molycorp rose to a
quarterly profit on Thursday as it produced more rare earths and
rare-earth speciality products, and sold them at a higher
The Colorado-based company said it sees strong sales growth
over the next year, but warned that production costs would be
higher on rising chemical and labor costs.
Rising costs could also put a dent in Molycorp's $781
million budget for the expansion and modernization of its
Mountain Pass mine and processing facility in California, though
Chief Executive Mark Smith played down the impact.
"There are clearly cost pressures in this industry right
now," he told Reuters. "We are constantly evaluating that
situation, making adjustments to the project management plan,
with the goal of staying as close to that budget number as
Molycorp expects the rare earth mine and new manufacturing
plant to achieve its commercial production rate by the end of
the third quarter.
The company is also eyeing upgrades to boost output at its
Silmet processing facility in Eastern Europe and at its Tolleson
facility in Arizona. The miner maintained its 2012 production
outlook at 8,000 to 10,000 tonnes of rare earth products.
In 2011, Molycorp produced 3,516 tonnes of rare earth
products, up from 1,830 tonnes in 2010. The average realized
selling price jumped to $97 per tonne from $19 in 2010 on higher
prices for the individual oxides, as well as the addition of
new, higher-value rare earth products.
Despite a pullback in prices in recent months, Smith was
optimistic on the outlook for rare earths, which are used in
electronic devices like smartphones and tablets, as well as in
green technology products like hybrid cars and wind turbines.
"We do anticipate a continued growing demand for these
products," said Smith. "And, certainly in the next three to five
years, we don't expect any significant players in this market
other than China, Molycorp and potentially Lynas."
China currently produces about 95 percent of the global
supply of the group of 17 metals. The country has repeatedly
clamped down on rare earth exports, sending prices of the
individual oxides, metals and alloys soaring.
Lynas Corp is developing a 20,000 tonne a year rare
earth mine in Australia with a processing facility in Malaysia,
but a legal challenge in Malaysia threatens to delay the
project, which was expected to start operations in June.
For the quarter ended Dec. 31, Molycorp's net income rose to
$26.6 million, or 26 cents a share. That compared with a net
loss of $7.9 million, or 12 cents a share, in the year-before
On an adjusted basis, income was $35.9 million, or 41 cents
a share, compared with an adjusted profit of $2.2 million, or 3
cents a share, in the same quarter of 2010.
Revenue rose more than sixfold to $132.9 million, reflecting
both the higher production and a bump in the realized selling
Analysts, on average, had expected earnings of 41 cents a
share on revenue of $134.95 million.
Molycorp said it produced 886 tonnes of rare earth products
in the fourth quarter, compared with 359 tonnes in the same
period of 2010. The average selling price in the quarter was
$124 a tonne.