Molycorp ends 2013 with cash, equivalents of $34 million; steps back from securing revolver

By Lisa Kerner

Charlotte, N.C., March 4 - Molycorp, Inc. president and chief executive officer Geoffrey R. Bedford said 2013 was a year of both challenges and accomplishments for the company.

In addition to making efforts to right-size, Molycorp completed the commissioning and the operational start-up of the Chlor-Alkali plant at its Mountain Pass, Calif., rare earth facility.

The plant is expected to play "a key role in helping us achieve operating break-even cash flow, before interest, this year," said Bedford.

Globally, markets "appear to be strengthening, albeit slowly," while demand in general seems to be returning "to more normalized levels," said Bedford during Molycorp's fourth-quarter and full-year 2014 earnings conference call on Tuesday.

Chief financial officer Michael F. Doolan said he is comfortable with Molycorp's current liquidity position. The company reported debt and capital leases of about $1.3 billion at year-end, according to the earnings news release.

"As of December 31, we maintained $314 million of cash and cash equivalents on the balance sheet," said Doolan on the call.

The CFO acknowledged that while efforts to secure a revolving credit facility have been discussed on prior calls, Molycorp has tabled the facility largely due to the company's changed liquidity position following a successful capital raise in October.

"In addition, we believe that the currently proposed terms of this credit facility would not have been favorable to the company, and our continued flexibility in terms of treasury management outweigh any potential benefit the revolver may offer," said Doolan.

During the question-and-answer session, CEO Bedford explained that the facility terms basically limited the company's ability to move cash from where it was made to where it is needed.

Molycorp will be in a position to cover its estimated capital expenditure costs of between $80 million and $90 million with operating cash flows in 2014, according to management. The company expects to be short in covering its debt, most notably the $100 million plus in interest expense.

Stepping back from the revolver means the company can consider other available opportunities, according to Doolan.

Financial highlights

Fourth-quarter consolidated revenues of $124 million were up 8% year-over-year and down 17% from the third quarter. The decline was attributed mainly to a shifting product mix.

For the full year, the company reported consolidated net revenues of $554 million, a 5% increase as compared to the full year 2012, driven by increased volume sales in certain segments, according to the release.

Molycorp reported a loss attributable to common stockholders of $197.2 million, or $0.95 per share, for the quarter and a full-year loss of $385.8 million, or $2.21 per share.

Cash flows from operating activities for the fourth quarter were a negative $64 million. Full-year cash flows were a negative $154 million.

Capital expenditures for the quarter ended Dec. 31 totaled about $45 million on a cash basis. They totaled $379 million for the full year.

Molycorp is a Greenwood, Colo.-based rare earths metals exploration company.

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