NEW YORK (TheStreet) -- Molycorp (MCP) was plummeting Tuesday as the rare earth miner said it expects to report negative-cash flow and lower-than-expected revenue for the three-month period ended September 30. Molycorp said it plans to raise additional funds to cover working capital and debt in a secondary stock offering worth $200 to $230 million, its second round of financing since the beginning of 2013.
The disappointing earnings revision is due to lower production, demand and pricing, coupled with higher production costs. In a SEC form filed Tuesday, the company wrote, "This trend will continue unless market conditions improve."
To the fourth quarter, Molycorp said, "We are optimistic that operating cash flow before debt service will improve but expect that cash flow after debt service will continue to be negative."
Molycorp shares were tumbling 17% to $5.89 as of 10:40 a.m. New York time, after closing Monday at $7.10. Molycorp is scheduled to report third-quarter earnings on November 4.
TheStreet Ratings team rates Molycorp INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate Molycorp INC (MCP) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself, deteriorating net income and generally high debt management risk."