Molycorp (MCP) Crushed After Big Miss

Spin as the company likes, rare earth miner Molycorp (NYSE:MCP) missed big in their quarterly report last night, generating a profit of 1 cent (adjusted) when analysts from FactSet were looking for 7 cents a share.

After closing at $66.47, losing $5.13, or 7.16 percent for the day, Molycorp continued its freefall after hours, plunging another $3.82, or 5.75 percent, to $62.65.

Revenue rose to $26.3 million from $3 million from the same quarter last year. Analysts had projected $41.68 million in revenue for the quarter.

Analysts had projected 10 cents a share in earnings on revenue of $42 million. Its net loss did shrink to $909,000, or 3 cents a share, from a net loss of $7.7 million, or 16 cents a share, a year ago.

According to Molycorp, it realized an average sales price of $37.73 per kilogram during the quarter, compared to an average sales price of $34.02 per kilogram in the fourth quarter of 2010, and an average sales price of $7.13 per kilogram for the first quarter of 2010.

Molycorp estimates it will produce between 4,541 metric tons and 5,813 metric tons of rare earth oxides this year.

CEO Mark Smith spun it this way, “We were very pleased to see both sales volume and revenue increase for Molycorp in the first quarter of 2011, as this quarter is typically characterized by slow buying and depressed activity in China due to its New Year celebrations. In spite of this, and in spite of the natural catastrophes experienced by Japan in the first quarter, we continued to see strong global demand for our products. Market prices of REOs rose significantly in the first quarter, helping to boost our price realizations.”

“A very significant development in the first quarter is the fact that we saw domestic Chinese REO prices rising along with prices for Chinese rare earth exports,” Smith said. “This points to several trends that we have noted for some months now: growing demand by China’s burgeoning manufacturing sector for Chinese rare earths; continuing success in the Chinese government’s efforts to crack down on illegal mining and exports; greater industry consolidation forced by the Chinese government; continuing impact on production of new environmental regulations on Chinese producers; government-mandated production quotas; and a halt to the issuance of new licenses for domestic exploration,” added Smith.

Molycorp is dragging down the rare earths sector as a whole, with China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element Res Ltd (AMEX:REE) and Avalon Rare Metals (AMEX:AVL) all closing down on the day and in after hours trading.