Molycorp Posts Quarterly Loss

Molycorp Posts Quarterly LossUS-based Molycorp (NYSE:MCP), the owner of California’s recently-restarted Mountain Pass mine, the largest rare earth element (REE) deposit outside of China, posted a smaller-than-expected quarterly loss as sales rose after customers began returning to the market.

The company reported consolidated net revenue of $205.6 million in 2012′s third quarter, a 49-percent year-on-year increase and a 97-percent increase compared to the previous quarter.

It sold 4,391 metric tons (mt) of product in the third quarter, including: “2,768 mt of rare earth oxide equivalent products at an average sales price of $43.45 per kilogram (kg); 1,527 mt of bonded magnet powders and alloys at an average sales price of $48.98 per kg; and 96 mt of rare metals at an average sales price of $269.22 per kg,” according to a company press release.

Molycorp noted that gross profit decreased as a result of much lower pricing and higher production costs offset by increased volumes.

“With regard to global trends, output from China continues to be significantly reduced,” said Mark Smith, president and CEO. “Chinese government officials are stepping up their efforts to enforce tougher environmental regulation and to curb illegal mining, and these efforts are putting pressure on production.”

In an email to Rare Earth Investing News, Jim Sims, Molycorp’s vice president of corporate communications, stated that the company expects to achieve its planned phase 1 run rate of 19,050 mt per year in the fourth quarter of 2012, mechanical completion of its phase 2 production capacity by the end of this year and phase 2 production capacity by mid-2013. Sims stressed that the actual rate of production for next year will, however, depend upon customer demand and “other factors.”

Non-rare earth magnet design breakthrough

UQM Technologies (AMEX:UQM) announced that it has made a notable move forward in the development of the non-rare earth magnet electric motor design that it is working on under its Department of Energy Advanced Research and Development Grant.

“Leveraging our expertise in electric motor design, we’ve developed an electromagnetic design that produces competitive power-density and efficiency with non-rare-earth magnets,” said Eric R. Ridenour, president and CEO of UQM Technologies. “This is great progress toward our objective of identifying magnet materials and technology that can deliver the performance our customers expect, while limiting our exposure to price and supply concerns associated with rare earth magnets.”

Jon Lutz, UQM’s vice president of engineering, added, “[t]he completion of the electromagnetic design and analysis task is a significant step in the process of advancing motor and generator technology for electric and hybrid electric vehicles, providing an alternative to rare-earth magnets in permanent-magnet motor designs.”

Market round-up

Suppliers increased offer prices for a number of REEs on the back of bullish expectations, although demand was subdued as a number of suppliers are still cautious about the market’s longer-term outlook.

According to a report by Metal-Pages, a second round of rare-earth-stockpile purchasing is expected in late November. The same sources claim that oxides of praseodymium, neodymium, dysprosium, terbium and europium will be the main targets during this upcoming round.

Buyers confirmed that suppliers are offering $52,914/tonne for 99 percent praseodymium/neodymium oxide. Downstream consumer buying of 99 percent dysprosium oxide remained flat last week.

China’s lanthanum oxide market continues to experience a lack of consumer interest, and prices are holding at relatively low levels. Sources said that some suppliers are quoting $8,501/tonne for 99 to 99.9 percent lanthanum oxide, while lower prices of $7,308/tonne have also been recorded.

Junior company news

Frontier Rare Earths (TSX:FRO) provided an update on the preliminary feasibility study (PFS) taking place at its South Africa-based Zandkopsdrift rare earth project.

It stated that assay results from the PFS drilling program confirm “the presence of extensive high grade rare earth mineralisation and the continuity of mineralisation from surface to an average depth of about 80 meters, with very high grades in excess of 10% and as high as 19.5% TREO [total rare earth oxide] identified in many holes.”

The company expects that the PFS resource estimate will lead to the majority of the Zandkopsdrift mineral resource being upgraded to the measured and indicated categories and converted into proven and probable mineral reserves when the PFS is completed.

Endurance Gold (TSXV:EDG) announced the discovery of new nepheline syenite-hosted rare earth and niobium prospects.

It noted that the mineralized prospects discovered this year are distributed over an area that is 2 square kilometers.

Results from this year’s prospecting and rock-sampling program “discovered additional intrusive hosted rare earth and niobium mineralization that indicate potential for discovery of a syenite-hosted rare earth-niobium-tantalum mineralizing system analogous to the Nechalacho and Strange Lake deposits,” stated Robert T. Boyd, Endurance’s president and CEO.

Peak Resources (ASX:PEK,OTCQX:PKRLY) extended the current resource model at its Ngualla rare earth project in Tanzania following a recent drilling campaign.

Additional infill drilling confirmed the continuity of high-grade rare earth mineralization extending from surface to depths of over 100 meters. New assays from recent drilling also identified additional near-surface mineralization, according to a press release.

New intersections from the area include 28 meters at 2.57 percent rare earth oxide (REO) from surface, 46 meters at 2.29 percent REO from 50 meters, 41 meters at 2.96 percent REO from surface and 31 meters at 2.66 percent REO from surface to end of hole. These near-surface mineralized intersections will extend the current resource model a further 200 meters to the south.

 

Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.