GREENWOOD VILLAGE, Colo. (AP) -- Molycorp Inc. said Wednesday that revenue and cash flow will be significantly lower than expected in the first half of 2013 and it must raise more money to cover an expected cash shortfall this year of about $250 million.
Shares fell $1.27, or 14 percent, to $7.56 in premarket trading. The stock is down 69 percent over the past 12 months.
The company has long been working to expand its Mountain Pass open-pit mine in San Bernardino County, Calif., which it said earlier this month has become operational. That process has taken longer than it expected, crimping production volumes. Meanwhile, prices for the rare earth minerals it produces have dropped significantly, hurting sales.
Rare earth minerals are used in consumer electronics and other products.
Molycorp plans to sell up to $345 million in new stock and convertible senior notes for capital spending. Selling new shares makes existing shareholders' stakes less valuable.
The company, which is based in Greenwood Village, Colo., said the modernization work at Mountain Pass is now expected to cost $1.42 billion, up from an original forecast of $1.2 billion and a November revision to $1.25 billion. Molycorp said it had run into additional cost pressures, and that efforts to control costs within budget had not worked.
It has $200 million of cash — but needs to spend $380 million for the remaining modernization work and another $50 million on other maintenance and expansion spending in 2013. That, combined with the company's expected cash flow, gives it a shortfall of $250 million this year.
In order to fill that gap and continue funding its Mountain Pass expansion, Molycorp plans to offer $200 million in common stock and $100 million in 2018 notes. If the banks managing those offerings buy additional stock and debt, that would increase to $230 million in stock and $115 million in notes.
