Should Investors Pull Money From Molycorp Inc (NYSE:MCP)?

Posted by Steve Raasch October 16, 2013 0 Comment 1350 views

On Tuesday, Molycorp Inc (NYSE:MCP) said that its cash-cushion has diminished to very inadequate levels. Resultantly, it has now announced its 2nd major financing in less than one year which has sent its shares plummeting by 21.41%. in 2010, the company has skyrocketed as China had clamped-down on the export of oxides and metals that are used in many hi-technology products such as hybrid vehicles and smartphones, which had added a great deal of momentum to the company. However, somewhere along the way, customers started looking for alternatives to certain rare-earths and China also ended up easing some of the export controls.

Adverse effects

Processing of these materials also became a difficult business. All of this has affected the company’s stock value which now stands at $5.58/share. On Tuesday, Molycorp Inc (NYSE:MCP) said that it might sell upto $200M of common-stock. This might also touch $230M if the company’s underwriters exercise their options. This year, the company has raised $414M to complete its modernization and expansion plans at the main mine that is located in Mountain Pass, California.

Tuesday’s trading

In Tuesday’s trading, Molycorp Inc (NYSE:MCP) dropped by 21.41%. The opening price of the shares was $5.87, which climbed to an intraday high of $6.07 and dipped to a close of $5.58. Approximately 34.38 million shares were traded on Tuesday while an average volume of 6.47 million shares were traded over a 30 day period. The 52-week low of Molycorp Inc (NYSE:MCP) shares is $4.70 and its 52-week high is $11.89. The company has a market capitalization of $1.05 billion.

About the company

Molycorp Inc (NYSE:MCP) is a rare-earth oxide producer with operations in the Western hemisphere. It owns developed rare-earth projects outside China. Molycorp Inc (NYSE:MCP) also owns rare-earth oxide and rare-metal producer in Europe. It produces rare-earth alloys in the United States.

About Steve Raasch

Steve Raasch is a breaking news reporter for GDP insider. During his nearly two decades of editorial experience, Steve has covered a variety of topics including small business, health, personal finance, advertising, workplace issues and consumer behavior. Steve is very passionate about his work. Steve earned a master of arts degree in international relations from the Johns Hopkins University School of Advanced International Studies in Washington.

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