Molycorp revenues rise; profits top analyst expectations

Boosted by increased output and sharply rising prices for its rare earths, mining company Molycorp's second-quarter earnings that were released Thursday easily beat the most optimistic analyst estimates.

Revenues of $99.6 million far outpaced the $1.9 million from a year ago, when operations at the Mountain Pass, Calif., mine about 15 miles south of Primm were still dormant.

With that updraft, the net income of $47.7 million, or 52 cents a share, reversed the $23.3 million loss, or 47 cents a share, one year ago.

The consensus estimate of six analysts polled by Yahoo Finance pegged this year's profits at just 40 cents a share, with the highest at 47 cents.

As a result, the stock price surged in after-hours trading -- the earnings were released after the market closed Thursday -- by 7.3 percent, or $3.94 a share, to $58.08.

Rare earths, a group of 17 ores, have applications that improve the performance and durability of industrial magnets, and key parts in high tech applications ranging from iPhones to hybrid cars to windmills to guided bombs. China produces more than 95 percent of the world's supply of rare earths but has cut exports and kept more for its own factories in recent years.

As a result, the average sales price of Molycorp rare earths soared from $7.16 a kilogram in the second quarter last year to $37.73 in the first quarter and $72.80 in the second.

"Rare earth prices are highly volatile and out of our control," said CEO Mark Smith, so the company does not predict future results .

That is a prime reason Molycorp's stock has careened wildly during its first year as a public company.

One year ago, the stock traded at $13.75. It surged sharply to a 52-week high of $79.16 in early May and dropped as low as $45.08 on Monday before rebounding .

But Smith repeated his oft-expressed stance on Thursday that rare earth supplies would continue to be tight for at least the next couple of years.

Molycorp now employs 815 people, most of them at Mountain Pass, compared to 50 three years ago. Almost all commute from Las Vegas.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.