View Full Version : Tracking Molycorp Minerals

4th May 2010, 12:19 PM
I am actively waiting for the IPO of Molycorp Minerals:


They are set to be the US's largest Rare Earth mineral mining firm, out of California.

I think this sector has a very bright future.

I will follow up with articles about Molycorp Minerals in this thread.

4th May 2010, 12:21 PM
Ecclestone says Molycorp IPO may be 1st step to re-establishment of US REE supply (http://www.mineweb.com/mineweb/view/mineweb/en/page72102?oid=103728&sn=Detail&pid=102055)

Hallgarten metals analysts Christopher Ecclestone suggests U.S. defense companies should help fill the financing deficit now being encountered by REE mining projects.
Author: Dorothy Kosich
Posted: Monday , 03 May 2010


An IPO aimed at raising $350 million for Molycorp, the owner and operator of largest and most recently mined rare earth element deposits in the Western hemisphere, may be the first step on the road back to re-establishing an U.S. REE supply, suggests Hallgarten & Co. analyst Christopher Ecclestone.

In a filing last month with the SEC, Molycorp said, "We are the only rare earth oxide, or REO, producer in the western hemisphere and own the world's largest, most fully developed rare earth project outside of China."

"Furthermore, following the execution of our ‘mine-to-magnets' strategy and completion of our modernization and expansion efforts, we expect to be one of the world's most integrated producers of rare earth products, including oxides, metals, alloys and magnets," the company said in its filing.

SRK Consulting estimates total proven and probable reserves of 2.21 billion pounds of REO at the Mountain Pass mine, located on the California side of the California/Nevada border, near Las Vegas. Molycorp said it is preparing to recommence mining operations late this year.

"Since Mountain Corp's Mountain Pass facility is not an early-stage rare earth project, we believe it has significant timeline advantages as it has a well-defined orebody, an existing open pit with over 50 years of production history, an existing mine and reclamation plan, proven reserves, substantial permitting, and all the necessary technology to successfully process and separate the rare earth elements at a commercial scale," the company told the SEC.

Both Molycorp and Hallgarten's Ecclestone reference the significance of a GAO Report on Rare Earths that was published last month and reported by Mineweb. Ecclestone referred to the report as a big shell that has "gone whizzing over the marketplace. The real barrage is yet to come with the Molycorp IPO set to ride the resurgent chatter in the sector and the politicians will begin to wade in and see how Rare Earth can be turned into pork with some Washington alchemy."

"The vast bulk of the report was no surprise as we all know the ball has been dropped in this space and not only by the US but by a whole swathe of western economies."

REE consultant and commentator Jack Litton estimated that Goldman-Sachs, Resource Capital [controlled by the Rothschild interests], Pegasus Capital, Traxys and a small management contingent paid $80 million for the privately held Molycorp, which they bought from Chevron. Litton estimated the buyout group's investment is less than $200 million "but they're likely to sell about 25% to 35% of the company to the street for $350 million which would value the original buyer's residual interest at something in the order of $500 million to $600 million when the dust settles."

"It is my opinion that the interest in the rare earth sector by the investing public is still ‘hot' so that this is a good time for a Molycorp IPO," Litton added.

Molycorp said it intends to use the net proceeds from the IPO to fund modernization and expansion of the Mountain Pass facility, as well as the development of new products, processes and technologies.

In his analysis, Ecclestone questions why Goldman Sachs sold out of Molycorp and surrendered its board seats just a few weeks before Molycorp "was throwing itself back into the equity markets with what should be a stellar debt. This is not the sort of money-making opportunity that Goldman is known to miss." Molycorp CEO Mark Smith recently told Bloomberg that Goldman Sachs sold its shares to the existing shareholders.

While the GAO report stressed the need for a domestic supply, Ecclestone insisted "The US and other countries do not need taxpayer supported strategic stockpiles; they need commercial accumulation of adequate supplies."

"The point we would emphasize here is that it is in the commercial sector's interest to ensure it is adequately supplied," Ecclestone suggested. "Even the steep cost of building Avalon's Thor Lake mine is chump change for Northrop Grumman. GE could buy Great Western Minerals for the price of one of its corporate jets."

In their IPO filing, Molycorp suggested U.S. federal government investments and policies may "materially increase end-market demand for our rare earth products. For example, the U.S. federal government recently approved $45 billion in grant funding and loan guarantees directed toward wind power generation projects and hybrid and electric vehicles. Pending energy legislation may also increase demand for clean technology applications, which use rare earth products."

In his analysis, Ecclestone warned there is a number of rare earth players "who do not seem serious about mine-building and may be just paying lip-service to the concept. Very few have made moves that might hasten production any time in the foreseeable future."

Nevertheless, Ecclestone insisted, "There is a supply crisis looming in the Rare Earth space and Mountain Pass is only going to make the rationing less severe rather than ameliorate it."

In his analysis, Ecclestone advised, "There is a substantial financing need in the sector with mine and processing plant buildouts costing north of $100MM and frequently much more. Current high valuations and market caps for the ‘sexiest' in the sector may make managements wary of raising serious cash while the mood is good in the sector."

"The US defense industry (and other users) have only themselves to blame for going for ‘cheap' over reliable since 1982," he stressed.

"When it comes down to it the US REE capability was sacrificed on the altar of cheap chisellers in one of the most well-padded sectors in the U.S. economy, if they can be even said to dwell in the real economy," Ecclestone asserted. "They dropped the ball and now seemingly want the government to make it right. ...They are even suggesting the government should compete with the private sector to buy the limited non-Chinese portion of the supply of REEs."

"Clearly it is time to hold the suppliers of defense infrastructure responsible for their own short-sightedness," he advised. "If Toyota wants lithium it takes a stake in Orocobre or commits at least to take the offtake. Glencore does likewise in the producers it wants. Why can't the US defense contractors make rain, metaphorically speaking, by providing some moisture to the REE ecosystem?"

4th May 2010, 12:22 PM
Molycorp Files IPO to Revitalize Rare Earths Mining (https://www.sustainablebusiness.com/index.cfm/go/news.display/id/20150)

SustainableBusiness.com News

Molycorp, Inc., whose subsidiary, Molycorp Minerals, LLC, is a U.S. rare earth producer, filed a registration statement with the U.S. Securities and Exchange Commission for an initial public offering (IPO) of its common stock to raise up to $350 million.

Molycorp said it expects to use the proceeds of the offering for the modernization and expansion of its Mountain Pass, California mining and production facility as well as for general corporate purposes.

In September Colorado-based Molycorp Minerals, announced plans to reopen its California mine, which shut down operation in the 1990's when Chinese mines undercut the market. But in recent years, demand for rare earths has risen dramatically for use in many electronics and cleantech products. As China's domestic manufacturing continues to grow in this area, the country said it will restrict exports of rare earth, thus bringing Molycorp's California mine back into play.

Molycorp is currently producing finished Rare Earth products from feedstocks that were stockpiled at the site from previous mining campaigns, while it prepares to modernize its processing facilities and restart active mining of fresh ore. The Company plans to be in full production in the second half of 2012, when it expects to begin producing at the rate of forty million pounds of finished Rare Earth products per year.

In March, the company announced plans for an exploration program to be carried out in 2010 and 2011, to better delineate the existence and extent of various Bastnasite, Monazite and other Rare Earth bearing mineral deposits known to exist outside the current mining area on the Company’s California property.

According to the Company, it has been known for decades that Rare Earth mineralization occurs on other areas of its property in the form of various Rare Earth bearing carbonate and phosphate minerals, including both Bastnasite and Monazite. However, the need was never felt to further delineate the extent of other deposits on the property because of the mineral content in the primary Rare Earth ore body.

Although the primary ore body that has been mined at Mountain Pass for the last 57 years contains economically recoverable heavy Rare Earth elements such as Dysprosium and Terbium, and the Company intends to produce certain heavy Rare Earth products (including Dysprosium and Terbium) from that deposit, it is primarily a Bastnasite deposit. Recent preliminary testing has verified the existence of Monazite deposits on the property, which are known to contain a higher percentage of the heavy Rare Earth Elements. The Company’s preliminary testing has shown that the Dysprosium content in the Monazite deposits on the property is substantially higher than in the Bastnasite deposits.
Molycorp says that its Mountain Pass mine is home to more than 2 billion pounds of rare earth oxides (REOs), giving it an estimated lifetime of 30 years, according to a Greentech Media story.

Website: www.molycorp.com

4th May 2010, 12:27 PM
Great interview, 5 pages long:

Mark Smith: Why Rare Earth Metals Matter (http://www.hardassetsinvestor.com/features-and-interviews/1/1571-mark-smith-why-rare-earth-metals-matter.html)

Tom Vulcan, rare earth metals reporter for HardAssetsInvestor.com, recently had the chance to speak in Washington, D.C., with Mark Smith, CEO of Molycorp Minerals LLC. With its mine at Mountain Pass, Calif., Molycorp currently owns and runs the Western Hemisphere's only rare earth ore mining operation.

3rd June 2010, 11:43 PM
So, when are they going to post an IPO?

27th October 2010, 06:48 AM
So, when are they going to post an IPO?

July 29th 2010 was the IPO. Price @ $12.10

Today $35.61

27th October 2010, 06:49 AM
Reuters Insider video interview with the CEO of MCP

Reuters Insider Link (http://insider.thomsonreuters.com/link.html?ctype=group_channel&chid=3&cid=155497&shareToken=MzplYzU0MThkMi0yNGI3LTRiNDUtOTRmNS00YTN kMGRlMTU5MDg%3D%0A)


Molycorp is one of the hottest IPOs of the year as it tries to ramp up production of rare earths in the US, a market that is dominated by China. We're joined now by the CEO of Molycorp, Mark Smith. Thanks for your time. My pleasure. How big is the potential rare earth market and what share do you want? The potential rare earth market at least the actually I should say rare earth market in 2010 is about 125,000 tons per year. Molycorp currently has plans in place to start production and produce 20,000 tons per year.

So roughly about one-sixth or so of the market is what we're looking for. The future of rare earths is really what we're focused on though because the production levels are going to have to exceed 200,000 tons per year as early as 2015. And that's really the market share that Molycorp is gonna be going after is that new growth area particularly in the high tech and clean tech industries. So what are your internal projections then for Molycorp's output and the timeframe to deliver the market?

Well we have a project that is on the books and we are implementing and executing as we speak. We will break ground on our project on January 1 of 2011. We will be mechanically complete with that project by July of 2012 and by the end of 2012, we will be producing at the rate of 20,000 tons per year. So it's a very significant project and one that we're very excited about. In terms of the economics, at what discount to today's prices would minding of rare earths be economically unviable?

You know, that's a very good question. I'm not sure that I can answer that precisely. However, I can say that the prices of rare earths have gone up very significantly just in the last one to two months. 600%-700% increases in these prices. What that reflects is a very, very tight supply and demand situation. The entire world outside of China needs about 50,000 tons of product a year, maybe a little more than that. All that China is exporting right now is about 30,000 of this material and they are planning to reduce the number of exports to the rest of the world next year. So we do think that these prices are here.

They're real and we think that they are very sustainable as we move forward. The Mountain Pass, the deposit that we have is an absolute world class rare earth deposit. We think it's second to none. Our deposit is so rich and so large that the economics would have to be seriously negative before our project would ever become a bad project. We have very, very good future for the company. Our business plans are all based on rare earth prices that are significantly lower than what the current prices are. So we've got a lot of protection there and on top of that, we have really worked hard on how we will be processing our rare earths and we will be the low cost producer in the world. And that gives us some little added cushion there if things were to go bad.

But we do not think things are going to be going bad. As I mentioned, there's a very, very tight supply and demand situation right now and it looks like it's gonna be very tight for some period of time to come. When you say low cost produce, are lower even than China? Absolutely. Based on the information we have in hand, we think our processing cost on a per pound of REO equivalent, the rare earth oxide equivalent, our prices should be about 50% of what the Chinese are producing at today. What's the biggest risk right now for Molycorp. Is it what's happening in China? You know, we don't think so. We don't view China as necessarily our competitor in this space because we plan to supply customers in Japan, the European Union and the United States.

The biggest risk that I think Molycorp has going forward is the simple factor of time because we've got a $511 million project that we plan to execute over an 18-month period. That takes a very, very serious and significant project management system which we feel very comfortable with but that is a lot to work to accomplish in an 18-month period. So we think project execution in the allotted 18-month period is probably our biggest risk right now. What do you see China doing next when it comes to rare earths in terms of what's happening on the export side? You know, I think that they have no choice but to continue to reduce the export quotas continually.

The demand in country is growing at such a rapid rate in China that they really have no choice but to divert their production in their products for their own uses in country. And that inevitably leads to less and less material available for the rest of the world. And that's why it's so important that we get projects like Molycorp up and running as soon as possible because we need to have these alternative supplies and they need to be available to the rest of the world. Who are some of the key Senators that you perhaps are speaking with to see if there can be a joint piece of legislation that gets through Congress on rare earth?

You know, I think it would be easier to answer the question, who we are not talking to. We have spent a tremendous amount of time in Washington DC talking to literally every Congressman and Senator, every White House government agency person that we can find that will listen to the story about rare earths. The reception has been absolutely tremendous, people get the issues, they understand that something has to be done right now. But we have really reached out to a very broad spectrum, a very bipartisan approach in how we're pursuing this. And the good news is is that we've gotten very good bipartisan support on HR 6160 with a very comfortable winning vote on that bill. So are you confident then there will be a final bill approved and sent on to the President perhaps next year?

We are very hopeful of that that the key to what we're pushing very hard on is research and development and courses in our universities. That's the push that Molycorp has right now and that's what we're very interested in. Getting back a little bit to what you said earlier in terms of pricing that we've seen a 600%-700% rise in some of these prices for rare earths. Neo-material CEO is saying we're in the middle of a bubble. Is that a fair assessment do you think and if so, how do you manage expectations as CEO if that is the case? I do not think that we are in a bubble situation because I think the supply and demand fundamentals of our industry suggest that supply is going to be very, very tight while demand is growing very, very rapidly. And economics 101 tells us that that's the situation where prices will continue to rise. Mark Smith, CEO of Molycorp. Thanks so much for your time, do appreciate it. I'm Rhonda Schaffler. This is Reuters.