Molycorp Delays Report to Determine ‘Substantial’ Writedown

Molycorp Inc. (MCP), owner of the largest rare-earths deposit outside China, said it needs more time to file its annual 10-K report so the company can determine the size of a “substantial” goodwill writedown.

The report, which was due to be filed with the U.S. Securities and Exchange Commission by March 1, is now expected to be submitted by March 15, the Greenwood Village, Colorado- based company said today in a statement. Molycorp also postponed the release of its fourth-quarter earnings results, which were due today.

The impairment is related to the company’s June purchase of Neo Material Technologies Inc. for C$1.3 billion ($1.27 billion), Luisa Moreno, a Toronto-based analyst at Euro Pacific Canada Inc., said today in a telephone interview.

“It’s not aggressive to think that if Neo Material were trading right now it would be trading with a market capitalization of less than a billion dollars,” Moreno said. “Most rare-earth stocks are down more than 50 percent.”

Molycorp may take a non-cash charge of “more than $300 million,” Moreno said.

Molycorp fell 8.3 percent to $5.72 at 9:55 a.m. in New York, bringing its decline in the past 12 months to 78 percent. The shares earlier dropped to $5.60, the lowest since they started trading in July 2010.

‘Surprising’ Reaction

“What’s surprising to me is the ferocity of the market reaction to the news,” Jonathan Hykawy, a Toronto-based analyst for Byron Capital Markets Ltd., said in an e-mail today. “This charge is non-cash, so would not of itself impact the company’s production ramp or prospects in any way.”

Molycorp has encountered delays in expanding its California rare-earth mine and missed a production target last year. Rare earths -- 17 elements used in magnets, oil refining and batteries -- have tumbled in the past 18 months after consumers delayed purchases and switched to cheaper alternatives following an earlier price rally.

Molycorp said in November it was being investigated by the SEC over the accuracy of its public disclosures. It fired Chief Executive Officer Mark Smith in December.

Molycorp said Jan. 10 its Mountain Pass mine missed its 2012 goal of producing 19,050 metric tons of rare-earth oxides by Dec. 31. The company pushed back the target until “mid- year” and deferred an expansion to 40,000 tons.

Molycorp raised $375 million by selling bonds and shares in January to help fund completion of Mountain Pass.

Jim Sims, a spokesman for Molycorp, declined to comment on the impairment in an e-mail.

To contact the reporter on this story: Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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