Here’s Why Molycorp Is In the Gutter

Molycorp (NYSE:MCP) fell 2.9 percent after reporting weaker-than-expected quarterly results. The rare earth miner has re-affirmed its annual production of REO equivalent products to be in a range of 8,000mt to 10,000 mt across all of its facilities for fiscal year 2012.

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The company has said that it expects no material changes to its Project Pheonix EPC capital budget of $895 million, as long as the measures it has implemented to mitigate certain adverse cost trends prove successful. Molycorp also expects no material changes if there are no unanticipated project close-out events.

The rare earth miner anticipates that certain additional capital expenditures for other capital projects related to operations at Mountain Pass are expected to total approximately $105 million. Molycorp is also reiterating its prior guidance related to cost of goods sold related to Project Phoenix ramping, in addition to its stated higher production costs on a consolidated basis. As the company reaches it Phase 1 and Phase 2 production levels, these incremental costs are expected to normalize moving into 2012.

JPMorgan lowered its estimates and price target for Molycorp, saying it remains cautious on the stock as the outlook for rare earth prices continues to drop. At JPMorgan, Molycorp’s price target was lowered to $23 from $27. Molycorp reported first-quarter revenue of $84.47 million, compared to consensus estimates of $116.22 million.

Earnings Report: Molycorp Earnings: Revenue Strengthens, Loss Widens.