Molycorp, Inc. (NYSE:MCP), the largest miner of rare earth elements outside of China, had its small cap stock downgraded by Dahlman Rose & Co. from "Buy" to "Hold," which sent its shares down on Friday.
According to Bloomberg, Molycorp is currently developing its Mountain Pass mine in California, and recently announced plans to sell 12 million shares for $10 each, as well as $360 million of convertible notes. This fundraising effort did not sit well with analysts, who believed it was indicative of slower growth.
"The size of the capital offering raises questions whether this project will be completed on time and whether the previous operating cost metrics can be achieved in a timely fashion," Anthony Young, an analyst at Dahlman Rose in New York, said in a report. "This mine will not ramp up as previously indicated."
Molycorp says it is on pace to increase output to 19,050 metric tons in the fourth fiscal quarter.
It appears investors sided with the analysts, as the mining firm's stock fell 10.8 percent to $9.95 as of 2:42 pm on Friday, August 17.
