* Molycorp says goodwill charge to be "substantial"
* Impairment charge tied to takeover of Neo Material
* Shares down 2.2 pct on the NYSE
(Adds analyst comment; updates share price move)
By Euan Rocha
TORONTO, Feb 28 Rare earth producer Molycorp Inc
on Thursday said it is delaying its quarterly results
and its annual report because it has yet to determine the size
of a goodwill impairment charge that will be recorded in the
Molycorp said it expects the goodwill impairment charge,
most of which will be related to its acquisition last year of
rare earth processor Neo Material Technologies Inc, will be
"substantial." Its shares fell 2.2 percent.
The company said it is writing down the value of the
goodwill associated with the $1.3 billion acquisition of Neo
Material. The writedown follows a warning by Molycorp last month
of significantly lower-than-estimated revenue and cash flow for
the first half of this year.
Molycorp, which had been expected to report financial
results for the fourth quarter and 2012 full year later on
Thursday, said it now expects to file its annual report by March
15. It said it will reschedule its earnings conference call to
coincide with the filing.
A surge in metal prices following the 2008-09 economic
crisis spurred mining companies across the globe to make costly
acquisitions and develop mammoth projects, but capital
expenditure costs have soared in the past year and metals prices
have stagnated, forcing many of the world's largest miners to
record major writedowns.
Brazilian mining giant Vale SA posted its first
quarterly loss in 10 years on Wednesday, taking $5.66 billion of
writedowns on money-losing mines.
The world's largest gold miner, Barrick Gold Corp,
booked a $3.8 billion charge earlier this month to write down
the value of Lumwana, a Zambian copper mine it acquired in 2011,
as part of its C$7.3 billion ($7.11 billion) takeover of Equinox
Molycorp's deal for Neo Material Technologies had been
touted as a game changer in the rare earth industry as it
transformed Molycorp into a one-stop rare earth shop.
The acquisition gave Molycorp access to Neo's rare
earth-processing capabilities and patents, making it the only
major North American player with the ability to both mine and
process the metals used in magnets and others applications.
The company recorded a substantial jump in goodwill on its
books following the close of the deal last June, rising to more
than $505 million as of June 30, 2012, from $3.4 million in the
Byron Capital Markets analyst Jon Hykawy said he was not too
concerned by the writedown, as it is unlikely to impact the
company's long-term prospects.
"If the goodwill impairment charge breaches any covenants
attached to any debt being carried by the company, then there
may be an impact on future prospects." wrote Hykawy, in a note
to clients. "Barring that, however, a charge of this type cannot
affect future cash flows."
"We continue to believe that the mine-to-magnet business
model is the correct model in the rare earths space," he said.
Molycorp shares, which fell more than 9 percent early in the
day, were down 14 cents at $6.10 in mid-morning trading on the
New York Stock Exchange.
(Reporting by Euan Rocha; Editing by Lisa Von Ahn, Peter
Galloway and Leslie Adler)