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MolyCorp Swings into Q4 Loss, To Slash Jobs (MCP)

Molycorp Inc (NYSE: MCP), world’s biggest rare-earth metal mining company outside China, reported wider-than-expected fiscal fourth-quarter losses late on Thursday as the bottom line was hurt by lower prices of rare earth metals, dip in production, increase in costs and a huge goodwill impairment charge linked to the acquisition of rare earth processer Neo Material Technologies back in 2012.

The Company also warned that its performance in the first half of the current year could be marginally weaker than the first half of 2012 due to cyclic nature of the industry. However, the Company said that momentum will pick up in the latter half of the current year as production will increase thanks to new processing plant at the Mountain Pass mine in California.

Meanwhile, Greenwood Village Colorado-based Company also announced that it will be slashing unstipulated number of jobs as it looks to trim overhead costs. The move is expected to save about $7 million to $10 million annually in salaries, bonuses and other related expenses, Molycorp said.

Rare earth metals, which are used as auto-catalysts and vital in making of tablets, smartphones and hybrid vehicles, are mainly produced in resources rich China. Prices of rare earth metals jumped to record high levels in 2010 and 2011 after China capped exports, forcing global rare earth miners to explore new supply sources. Prices however fell sharply after the Chinese government relaxed export restrictions. Moreover slowdown in the global economy in the second half of 2011 and 2012 further put pressure on rare metal prices. As the global economy momentarily looked to be on track for recovery following 2008-09 financial crises, costly acquisitions ensued. Nevertheless, jump in capital expenditure and stagnation in prices badly impacted financials of major rare earth metals mining companies, forcing huge write-downs.

For the fiscal fourth quarter ended December 31, Molycorp reported a loss of $359.6 million, or $2.91 a share, compared to a net income of $26.6 million, or 26 cents a share, in the year earlier quarter.

The Company took a goodwill impairment charge of $258.3 million in the fourth quarter linked to the $1.3 billion acquisition of Neo Material Technologies.

Stripping out onetime items such as goodwill impairment charge, loss came at $52.7 million or 45 cents a share, compared to a non-GAAP profit of $35.9 million of 41 cents a share. Analysts were expecting loss of 30 cents a share, according to a data compiled by Bloomberg.

Revenue during the period rose 1% to $134.3 million.



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