In mid-day trade on Monday Molycorp was changing hands for $10.06, up 2.2%, recovering from a brutal Friday when the rare earth miner was beaten down 11.8% – it was also one of the most actively traded stocks on the NYSE – following an analyst downgrade.
Dahlman Rose analyst Anthony Young in a research note published by Bloomberg argued that the Colorado-based company's recently-announced shares and convertible notes offering may not be sufficient to complete work on its Mountain Pass mine in California on time and within budget.
"This mine will not ramp up as previously indicated," Young said.
Molycorp – destined to become the number one producer of the 17 elements outside China – maintains it is already close to halfway in reaching its ultimate production capacity target of 40,000 tonnes per annum and in 2012 will produce between 8,000 to 10,000 tonnes from Mountain Pass.
Molycorp's fall from grace have been nothing short of spectacular – losses since hitting a high of $77.54 on May 3 2011 has now reached 80%; a market value of $1.1 billion.
The company's Q2 results initiated the recent sell-off. The company swung into a loss in the second quarter on the back of higher costs, lower sales volumes and significantly lower prices for its rare earth oxides.
The average realized price per kilogram of the rare earth oxides Molycorp sells fell again to $52 – from $95 a kilogram in Q1 and $120 a kilogram in the final quarter of last year.