molycorp announces output and revenue miss, page-14

Molycorp Blasts Shareholders Instead of Ore
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By Christopher Barker | More Articles
January 10, 2013 | Comments (0)

When investors bemoan the unceremonious slap in the face that they've just received from controversial rare-earth elements developer Molycorp (NYSE: MCP ) , interim CEO Constantine Karayannopoulos will say he had no choice. He'd be absolutely right, and I think now we have a much clearer explanation for prior CEO Mark Smith's sudden departure from the project he helped to launch.

Molycorp's shares crumbled by more than 20% Thursday morning after the company slashed 2013 revenue expectations and delayed phase 1 production from the revamped Mountain Pass mine in California until mid-year. Ramp-up delays are commonplace in the mining industry, as for example with the recent delay impacting IAMGOLD's (NYSE: IAG ) Sadiola expansion. But typically, some indication of a schedule revision is communicated to the market before the previously targeted time frame has expired.

Molycorp investors, of which I am one, rang in the new year with the understanding that phase 1 annual output of 19,050 tons of rare-earth oxide (REO) equivalent from Mountain Pass was already imminent. According to Karayannopoulos: "The targets of achieving full phase-1 run rate by the end of 2012 in my view were too aggressive. The expectation that somehow we would have pushed a button and boom we would have gotten to phase-1 operating rates overnight was not realistic and it should not have been the expectation."