‘Too Cheap’
With signs of a recovery in rare-earth metals, Balter at Oracle Investment says that Molycorp’s ability to generate cash from extracting the elements and processing them into high- powered magnets makes the company an attractive takeover for any acquirer willing to take the risk.
Its
cash flow will jump almost 10-fold next year on a per- share basis, according to a March 11 report from Matthew Gibson, a Toronto-based analyst at CIBC World Markets Inc.
Balter pointed to
KKR & Co. (KKR)’s buyout in 2000 of Princeton, New Jersey-based
Rockwood Holdings Inc. (ROC), which produces lithium- based compounds that are now used to power electric cars.
“A buyer just has to look beyond their nose to the next quarter and look two or three years out,” said Balter, whose firm owns
Molycorp stock. He estimated that Molycorp could get at least $60 a share in takeover, about 77 percent higher than its price last week. “It’s just too cheap to ignore.”
