Molycorp Inc., owner of the world’s largest non-Chinese deposit of rare-earth metals, declined in its first day of trading after chopping the size of its initial public offering by 18 percent.
Shares of the Greenwood Village-based company lost 8.2 percent to $12.85 in composite trading. Molycorp sold 28.13 million shares at $14 each after its underwriters failed to attract enough buyers at $15 to $17 apiece, according to Bloom berg data. The mining company’s owners purchased about 8.9 percent of the shares available in the IPO.
Molycorp will use the $394 million in IPO proceeds to fund plans to restart operations at a mine that holds deposits of rare-earth metals used to make magnets for items such as smart bombs and hybrid cars. The producer, which hasn’t made a profit since acquiring the site two years ago, will compete with Chinese companies that supply 97 percent of the metals globally, according to its regulatory filing.
“It seems like a lot of money to ask,” said Robert Auer, a manager at Indianapolis-based SBAuer Funds LLC, which oversees about $200 million. “It’s a bet on something so unknown, and in this market where there’s fierce competition for dollars, there may be better buys.”
Morgan Stanley and JPMorgan Chase & Co. in New York led the company’s offering.
Molycorp’s mine near Mountain Pass, Calif., once met almost all the world’s rare-earth metals demand before closing down eight years ago as China, which has the world’s biggest deposits, increased low-cost production.
