Molycorp's Heavy Rare Earth Announcement Raises Questions
One of the best known names in the rare earth market, Molycorp, is stealing the headlines yet again with the announcement of heavy rare earth element (HREE) deposits surrounding the company's Mt. Pass mine in California. Rare earth analysts are questioning the timing of the announcement amidst falling share prices.
By Michael Montgomery—Exclusive to Rare Earth Investing NewsOne of the best known names in the rare earth market, Molycorp (NYSE: MCP), is stealing the headlines yet again. The company announced that it is exploring heavy rare earth element (HREE) deposits surrounding the company's Mt. Pass mine in California. Many analysts have been critical of Molycorp's Mt. Pass mine because it is lacking substantial heavy rare earth's, some of the highest priced and rarest elements in the group of 17 elements that make up the rare earth block of minerals. While some of the light rare earths, like neodymium and cerium may have greater demand, the heavy rare earths are more valuable. By increasing the total HREE concentration the company is hoping to build the value of their company. However, many analysts are questioning not only the timing of this announcement shortly after the company's share price took a nose dive, but also the time frame in which the CEO Mark Smith stated the company could produce on the deposit. The potential HREE resource The news of this deposit started with an article in The New York Times in which Molycorp CEO Mark Smith is quoted saying, “[T]hat the company might be able to begin producing heavy rare earths in a little over a year from now,” adding, “the ore is near the surface and would require very little strip mining.” However, the news of this HREE outcropping is not breaking news. The company announced the exploration of the area in March 2010. The company stated in the press release that “it has been known for decades that Rare Earth mineralization occurs on other areas of its property.” The release goes on to explain that its main Mt. Pass ore body is a bastnasite deposit higher in light rare earths, and that the company is exploring the existence of a Monazite deposit which are known to contain higher concentrations of HREE's. Dr. John L. Burba, the company's executive vice president gave a presentation in Washington D.C. about the new HREE deposits. According to historical exploration by Unocal, the 3 deposits all contain over 4 percent total rare earth oxide (TREO) with very significant HREE content. If correct, the percentage of TREO would make the finding a world class rare earth deposit. The company has known about the historical exploration for some time now, which is causing some to question why this is now headline news.