Molycorp Reports Second Quarter 2012 Results

Molycorp, Inc. (NYSE:MCP) (“Molycorp” or the “Company”) today announced financial and operating results for the second quarter 2012.

"Molycorp continues to make significant progress on our three strategic priorities: completing Project Phoenix, commercializing XSORBX, and integrating Neo Materials (now known as Molycorp Canada) into Molycorp," said Mark Smith, President and Chief Executive Officer. "Our phased start-up of Project Phoenix Phase 1 is in full-swing, and we are on target to meet our accelerated schedule of achieving the Phase 1 production rate of 19,050 metric tons in Q4."

Smith continued: "We successfully completed the acquisition of Neo Materials during the quarter, and are now producing a full range of ultra-pure, highly engineered custom materials, including heavy rare earths. Molycorp Magnequench had a record quarter in Q2 2012, selling 1,880 mt of alloy powders. In the brief integration period to date, I continue to be impressed with the knowledge, work ethic, and passion which all of our employees bring to the Molycorp family. I continue to believe the addition of Molycorp Canada better positions the Company through diversification into new geographies and sophisticated end-use markets. Our vertical integration into a comprehensive provider of advanced materials has expanded significantly with the addition of Molycorp Canada."

QUARTERLY RESULTS

Net sales for the quarter were $104.6 million, up 5% from the second quarter 2011. Molycorp Silmet and Molycorp Metals & Alloys (MMA) were acquired during the second quarter of 2011, and Molycorp Canada was acquired on June 11, 2012, which both contributed to net sales during Q2 2012.

Molycorp's second quarter GAAP gross loss was $4.1 million during the quarter, compared to gross profit of $56.7 million during the second quarter of 2011. Gross profit decreased substantially from the prior year period as a result of lower product volumes shipped, lower prices, increased production costs, and other transaction costs related to acquiring Molycorp Canada. Gross loss during the quarter was negatively impacted by $30.4 million of expenses related to certain inventory write-downs, the impact of purchase accounting, stock-based compensation in cost of sales, and abnormal costs.

Molycorp’s second quarter GAAP loss attributable to common stockholders was $67.6 million, or a loss of $0.71 per diluted share. Earnings decreased substantially from the prior year period as a result of lower product volumes, lower prices, costs related to the Project Phoenix transition, and other transaction costs related to acquiring Molycorp Canada. Adjusted loss per diluted share of $0.03 reflects operational expansion items, out-of-ordinary business expenses, and certain non-cash items as compared to U.S. GAAP loss per share, such as $52.8 million related to the acquisition of Molycorp Canada, $19.5 million in consolidated inventory write-downs, and $8.4 million in purchase accounting adjustments impacted earnings, among others.

2012 OUTLOOK

As of August 2, 2012, the Company is re-affirming its annual production of REO equivalent products to be in the range of 8,000 mt to 10,000 mt for the full year across its Mountain Pass, Sillamäe and Tolleson facilities, which does not include production from its newly acquired Molycorp Canada operations. The Company continues to believe it is well positioned for year-over-year sales growth given the Mountain Pass ramp-up, existing customer orders, a growing pipeline of global business opportunities, and its acquisitions.

Capital expenditures for Project Phoenix Phase 1 and Phase 2, commissioning and start-up, and other capital projects at our Molycorp Mountain Pass facility are expected to be approximately $289 million on an accrual basis for the remainder of 2012. All other capital expenditures across the Company (including Molycorp Canada) are expected to be approximately $17 million for the remainder of 2012.

All of the amounts for future capital spending described above are estimates that are subject to change as the projects are further developed. The Company is encountering cost pressures on its projects and has initiated measures to mitigate certain adverse cost trends. The Company may incur additional costs, which may be material, if its mitigation measures are not successful.

The Company expects to fund operating expenses, working capital, capital expenditures and other cash requirements from its available cash balances, anticipated cash flow from operations, and other financing arrangements. Based on our on-going monitoring of the rare earth industry and our business, we expect that our cash flow from operations for the remainder of 2012 will likely be less than we expected. Accordingly, we will need to secure additional financing for a substantial portion of our remaining 2012 capital expenditures and other cash requirements. For example, we are in negotiations with various third-parties with respect to potential equipment leasing arrangements, asset-based revolving credit facilities and other debt financing arrangements. We cannot assure you that we will be able to obtain any such financing on commercially acceptable terms or at all.

If we are unable to raise sufficient capital through public or private securities offerings, or other alternative sources of financing, we will implement a short-term business plan in 2012. Under this plan, discretionary capital expenditures, and if necessary, non-discretionary capital expenditures will be curtailed during the second half of the year.

2012 MARKET DYNAMICS

During the second quarter of 2012, prices for most of our products have stabilized or declined at a much slower pace than earlier in the year. We believe this trend may continue in the third and fourth quarter of 2012, although there can be no assurance.

Commenting on recent market conditions, Smith said: “The diversity of our vertical integration strategy is showing its value, as we have observed strengthening markets for certain downstream rare earth products, including bonded magnetic powders produced by Molycorp Magnequench. On the whole, pricing of rare earth oxides have flattened, although the floor remains soft in certain Japanese supply chains. We believe that these supply chains will continue to de-stock over the second half of 2012. The longer-term supply and demand picture remains tight as Chinese regulations increase and the industry continues to consolidate within China. Molycorp remains well positioned to fulfill the demand gap as it brings reliable supply online from Project Phoenix."

Smith continued: "We see motor miniaturization and the ongoing increase in hybrid electric and full electric vehicle sales, driven by the need for increased global fuel efficiency, as a key growth driver for our industry. We anticipate the continuing stabilization of pricing and, more importantly, Molycorp's availability of supply as having a positive impact on the growing demand of neodymium-iron-boron (NdFeB) magnets in the automotive space. Design engineers should not worry any longer about uncertainty of supply."

CONFERENCE CALL TODAY AT 4:30 P.M. EASTERN

Molycorp will conduct a conference call today to discuss these results at 4:30 p.m. EST, hosted by Mark Smith, Chief Executive Officer, and Michael Doolan, Executive Vice President and Chief Financial Officer. Investors interested in participating in the live call from the U.S. should dial +1 (866) 783-2139 and reference passcode number 62830722. Those calling from outside the U.S. should dial +1 (857) 350-1598 and use the same confirmation number.

There will also be a simultaneous live audio webcast available on the Investor Relations section of the Company’s website at www.molycorp.com/investors. The webcast will be archived on the website.

FINANCIAL STATEMENTS AND SUPPLEMENTARY TABLES

TABLE 1: BALANCE SHEET

MOLYCORP, INC.

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share and per share amounts)
   
June 30, 2012 December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents $ 369,262 $ 418,855
Restricted cash 4,951
Trade accounts receivable, net 118,402 70,679
Inventory 319,872 111,943
Deferred charges 16,627 7,318
Deferred tax assets 9,179
Income tax receivable 28,648 10,514
Prepaid expenses and other current assets 46,038   19,735  
Total current assets 912,979   639,044  
Non-current assets:
Deposits 23,283 23,286
Property, plant and equipment, net 1,153,304 561,628
Inventory 10,445 4,362
Intangible assets, net 491,927 3,072
Investments 55,339 20,000
Deferred tax assets 1,704
Goodwill 505,003 3,432
Other non-current assets 5,244   301  
Total non-current assets 2,246,249   616,081  
Total assets $ 3,159,228   $ 1,255,125  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable $ 287,928 $ 161,587
Accrued expenses 56,605 12,898
Income tax payable 25,013
Deferred tax liabilities 692 1,356
Debt and capital lease obligations 263,569 1,516
Other current liabilities 3,807   1,266  
Total current liabilities 637,614   178,623  
Non-current liabilities:
Asset retirement obligation 20,162 15,145
Deferred tax liabilities 172,715 18,899
Debt and capital lease obligations 850,319 196,545
Derivative liability 9,148
Pension liabilities 2,835
Other non-current liabilities 3,404   683  
Total non-current liabilities 1,058,583   231,272  
Total liabilities $ 1,696,197   $ 409,895  
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 350,000,000 shares authorized at June 30, 2012 110 84
Preferred stock, $0.001 par value; 5,000,000 shares authorized at June 30, 2012 2 2
Additional paid-in capital 1,518,347 838,547
Accumulated other comprehensive loss (10,172 ) (8,481 )
(Deficit)/retained earnings (61,697 ) 15,078  
Total Molycorp stockholders’ equity 1,446,590 845,230
Noncontrolling interests 16,441    
Total stockholders’ equity 1,463,031   845,230  
Total liabilities and stockholders’ equity $ 3,159,228   $ 1,255,125  
 

TABLE 2: INCOME STATEMENT

MOLYCORP, INC.

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except share and per share amounts)
       
Three Months Ended Six Months Ended

 
June 30 June 30
2012 2011 2012 2011
Sales

$
104,577

$
99,615

$
189,047

$
125,876
Costs of sales:
Costs excluding depreciation and amortization (103,569 ) (40,348 ) (153,641 ) (55,069 )
Depreciation and amortization   (5,081 )   (2,575 )   (8,452 )   (4,531 )
Gross profit (4,073 ) 56,692 26,954 66,276
Operating expenses:
Selling, general and administrative (23,070 ) (10,476 ) (47,253 ) (19,175 )
Corporate development (14,925 ) (2,042 ) (18,305 ) (3,317 )
Depreciation, amortization and accretion (2,279 ) (523 ) (2,637 ) (840 )
Research and development   (6,049 )   (1,753 )   (9,699 )   (3,017 )
Operating (loss) income   (50,396 )   41,898     (50,940 )   39,927  
Other income (expense):
Other (expense) income (30,980 ) 133 (37,558 ) (35 )
Foreign exchange (losses) gains, net (2,789 ) 42 (1,185 ) 42
Interest (expense) income, net   (9,805 )   70     (9,720 )   210  
  (43,574 )   245     (48,463 )   217  
(Loss) income before income taxes and equity earnings (93,970 ) 42,143 (99,403 ) 40,144
Income tax benefit 27,303 6,612 29,485 6,413
Equity in results of affiliates

 
(257 )       (484 )    
Net (loss) income (66,924 ) 48,755 (70,402 ) 46,557
Net income attributable to noncontrolling interest   (680 )   (968 )   (680 )   (968 )
Net (loss) income attributable to Molycorp stockholders

$
(67,604 )

$
47,787  

$
(71,082 )

$
45,589  
 
Net (loss) income

$
(66,924 )

$
48,755

$
(70,402 )

$
46,557
Other comprehensive income:
Foreign currency translation adjustments   (4,221 )   1,324     (1,691 )   1,324  
Comprehensive (loss) income

$
(71,145 )

$
50,079  

$
(72,093 )

$
47,881  
Comprehensive (loss) income attributable to:
Molycorp stockholders (70,465 ) 48,980 (71,413 ) 46,782
Noncontrolling interest   (680 )   1,099     (680 )   1,099  

$
(71,145 )

$
50,079  

$
(72,093 )

$
47,881  
Weighted average shares outstanding (Common shares)
Basic   99,175,285     83,847,119     93,090,872     83,054,811  
Diluted   99,175,285     84,413,499     93,090,872     83,339,566  
(Loss) income per share of common stock:
Basic

$
(0.71 )

$
0.54  

$
(0.82 )

$
0.50  
Diluted

$
(0.71 )

$
0.53  

$
(0.82 )

$
0.50  
 

TABLE 3: STATEMENT OF CASH FLOWS

MOLYCORP, INC.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)
 
Six months ended

June 30,2012
 

June 30,2011
Cash flows from operating activities:
Net (loss) income

$
(70,402 )

$
46,557
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion 11,188 5,895
Deferred income tax benefit (12,131 ) (13,481 )
Inventory write-downs 26,106 1,585
Stock-based compensation expense 1,900 3,386
Foreign currency transaction losses, net 1,214
Unrealized loss on derivatives
Allowance for doubtful accounts 2,500
Equity results of affiliates 484
Other operating adjustments and write-downs (66 ) (113 )
Net change in operating assets and liabilities   (25,174 )   (12,471 )
Net cash (used in) provided by operating activities   (64,381 )   31,358  
Cash flows from investing activities:
Cash paid in connection with acquisitions, net of cash acquired (591,011 ) (20,021 )
Investment in joint venture (14,805 )
Deposits (488 ) 10,700
Capital expenditures (403,932 ) (79,291 )
Other investing activities   2     (33 )
Net cash used in investing activities   (1,010,234 )   (88,645 )
Cash flows provided by financing activities:
Capital contributions 390,225
Repayments of short-term borrowings—related party (1,688 )
Repayments of debt (2,188 ) (2,958 )
Net proceeds from sale of preferred stock 199,642
Net proceeds from sale of Senior Notes 635,373
Net proceeds from sale of Convertible Notes 223,100
Payments of preferred dividends (5,693 ) (3,320 )
Proceeds from debt 9,745 6,288
Other financing activities   (2,394 )   (22 )
Net cash provided by financing activities 1,025,068 421,042
Effect of exchange rate changes on cash   (46 )   97  
Net change in cash and cash equivalents (49,593 ) 363,852
Cash and cash equivalents at beginning of the period   418,855     316,430  
Cash and cash equivalents at end of period

$
369,262  

$
680,282  
 

TABLE 4: SEGMENT INFORMATION
Three months ended and at June 30, 2012 (In thousands)   Molycorp Mountain Pass   Molycorp Silmet   MMA   Molycorp Canada   Eliminations(a)   Corporate and other(b)   Total Molycorp, Inc.
Sales:
External

$
16,533

$
31,541

$
12,870

$
43,633

$

$

$

104,577
Intersegment   400     712         14     (1,126 )        
Total sales 16,933 32,253 12,870 43,647 (1,126 ) 104,577
Cost of sales:
Costs excluding depreciation and amortization (22,277 ) (37,947 ) (17,112 ) (37,703 ) 11,470 (103,569 )
Depreciation and amortization   (2,229 )   (1,526 )   (79 )   (1,247 )           (5,081 )
Gross profit (7,573 ) (7,220 ) (4,321 ) 4,697 10,344 (4,073 )
Operating expenses:
Selling, general and administrative (9,041 ) (1,510 ) (116 ) (1,737 ) (10,666 ) (23,070 )
Corporate development (14,925 ) (14,925 )
Depreciation, amortization and accretion (365 ) (77 ) (1,813 ) (24 ) (2,279 )
Research and development   (2,006 )   (359 )       (1,175 )       (2,509 )   (6,049 )
Operating (loss) income (18,985 ) (9,166 ) (4,437 ) (28 ) 10,344 (28,124 ) (50,396 )
Interest expense (177 ) (175 ) (828 ) (8,625 ) (9,805 )
Other income (expense)   21     (2,385 )   8     (478 )       (30,935 )   (33,769 )
(Loss) income before income taxes and equity earnings (loss)

$
(18,964 )

$
(11,728 )

$
(4,604 )

$
(1,334 )

$
10,344  

$
(67,684 )

$
(93,970 )
Equity (loss) earnings in results of affiliates

$
(15,754 )

$
 

$
 

$
309  

$
15,754  

$
(566 )

$
(257 )
Total assets

$
433,808  

$
79,185  

$
20,174  

$
1,746,876  

$
(80,988 )

$
960,173  

$
3,159,228  
Investment in equity method affiliates

$
14,011  

$
 

$
 

$
19,053  

$
 

$

 

$

33,064
 
Capital expenditures (c)

$
228,787  

$
5,254  

$
 

$
832  

$
 

$

 

$
234,873  
 

TABLE 5: EARNINGS PER SHARE
(In thousands, except share and per share amounts)  

Three MonthsEnded June 30,2012
 

Three MonthsEnded June 30,2011
Net (loss) income attributable to Molycorp stockholders

$
(67,604 )

$
47,787
Dividends on Convertible Preferred Stock   (2,846 )   (2,846 )
(Loss) income attributable to common stockholders   (70,450 )   44,941  
Weighted average common shares outstanding—basic 99,175,285 83,847,119
Basic (loss) earnings per share

$
(0.71 )

$
0.54  
Weighted average common shares outstanding—diluted 99,175,285 84,413,499
Diluted (loss) earnings per share

$
(0.71 )

$
0.53  
 
 
 
(In thousands, except share and per share amounts)

Six MonthsEnded June 30,2012

Six MonthsEnded June 30,2011
Net (loss) income attributable to Molycorp stockholders

$
(71,082 )

$
45,589
Dividends on Convertible Preferred Stock   (5,693 )   (4,269 )
(Loss) income attributable to common stockholders   (76,775 )   41,320  
Weighted average common shares outstanding—basic 93,090,872 83,054,811
Basic (loss) earnings per share

$
(0.82 )

$
0.50  
Weighted average common shares outstanding—diluted 93,090,872 83,339,566
Diluted (loss) earnings per share

$
(0.82 )

$
0.50  
 

TABLE 6: PRODUCT REVENUE, VOLUME, ASPS
Product Revenues, Volumes    
Three Months Ended June 30,

Revenues (in thousands)
2012 2011
REO Equivalent Products
Molycorp Mountain Pass, Silmet Selected Products
Neodymium/Praseodymium Products

$
11,581

$
26,464
Lanthanum Products 8,936 16,792
Cerium Products 10,896 31,235
Consolidated Segments
Other Rare Earth Products1 22,270 1,099
Rare Earth Alloys   8,984   7,182
Subtotal REO Equivalent 62,667 82,772
 
Rare Metals2 17,470 13,525
Neo Powders 18,662
Other3   5,778   3,318
Total Net Revenues

$
104,577

$
99,615
 
         

Three Months Ended June 30,

Volumes (in metric tons)
2012 2011
REO Equivalent Products
Molycorp Mountain Pass, Silmet Selected Products
Neodymium/Praseodymium Products 148 182
Lanthanum Products 429 427
Cerium Products 350 351
Consolidated Segments
Other Rare Earth Products1 242 13
Rare Earth Alloys   25   43
Subtotal REO Equivalent 1,194 1,016
 
Rare Metals2 93 79
Neo Powders 368
Other3   146   1,419
Total Product Volumes nm nm
 
         

Three Months Ended June 30,

Avg Selling Price per kilogram
2012 2011
REO Equivalent Products
Molycorp Mountain Pass, Silmet Selected Products
Neodymium/Praseodymium Products

$
78

$
145
Lanthanum Products 21 39
Cerium Products 31 89
Consolidated Segments
Other Rare Earth Products1 92 85
Rare Earth Alloys   359   167
Subtotal REO Equivalent 52 81
 
Rare Metals2 188 171
Neo Powders 51
Other3   40   2
Average Selling Price nm nm
 
 
nm = not material
1. Other rare earth products consists of: dysprosium, europium, gadolinium, samarium, terbium, yttrium, yttrium-europium co-precipitates, rare earth fluorides; and neodymium, praseodymium, lanthanum, and cerium from Molycorp Canada.
2. Rare metals consist of niobium, tantalum, gallium, indium and rhenium.
3. Other non-rare earth products consists of: zirconium oxides and salts, mixed rare earth/zirconium oxides, specialty alloys, small metals and metal. These volumes are not REO equivalent, but metric tons.
 

TABLE 7: NON-GAAP ADJUSTED NET INCOME RECONCILIATION

Molycorp, Inc.Non-GAAP financial measuresAdjusted Net Income (Loss)
 
(In thousands, except per share data)

Three MonthsEnded June 30,
2012
Net (loss) income attributable to Molycorp stockholders

$
(67,604 )
Certain non-cash and other items:
Stock-based compensation 1,075
Inventory write-downs 19,542
Impact of purchase accounting on cost of inventory sold, net of tax 8,361
 
 
Out of the ordinary items:
Water removal 4,532
Project Phoenix non-capitalizable costs 4,278
 
 
Business Expansion items:
Due diligence and other transaction costs 53,756
Other business expansion expenses 3,466
Income tax effect of above adjustments   (27,553 )
Adjusted net (loss) income

$
(147 )
Cumulative paid and undeclared dividends on preferred stock   (2,846 )
Adjusted net (loss) income attributed to common stockholders for dilutive EPS purposes   (2,993 )
Weighted average diluted shares outstanding   99,175,285  
Adjusted diluted net (loss) income per share

$
(0.03 )
 

NON-GAAP ADJUSTED NET INCOME

Adjusted EPS is a non-GAAP measure that excludes certain non-cash items and other out-of-ordinary operational and business expansion items. The Company’s management believes adjusting out these items, including but not limited to purchase accounting adjustments, stock-based compensation, out-of-ordinary expenses/income and other miscellaneous charges is useful to investors because it provides an overall understanding of the Company’s historical financial performance and future prospects. Management believes adjusted EPS is an indication of the Company’s base-line performance. Exclusion of these items permits evaluation and comparison of results for the Company’s core business operations, and it is on this basis that management internally assesses the Company’s performance.

ABOUT MOLYCORP

Molycorp is a leading rare earths and rare metals company, and combines a world-class rare earth resource at Mountain Pass, California, with world-class ultra-high-purity rare earth and rare metal materials processing capabilities. With 26 locations across 11 countries, Molycorp is vertically integrated across the global rare earth mine-to-magnetics supply chain. It produces rare earth magnetic materials as well as a variety of high-purity, custom engineered products from 13 different rare earths (lights and heavies) as well as five rare metals (gallium, indium, rhenium, tantalum and niobium), and the transition metals yttrium and zirconium. Through its Molycorp Magnequench subsidiary, the Company is a leading global producer of neodymium-iron-boron (NdFeB) magnet powders, used to manufacture bonded NdFeB permanent rare earth magnets. Through its joint venture with Daido Steel and Mitsubishi Corporation, Molycorp expects to begin manufacturing next-generation, sintered NdFeB permanent rare earth magnets in early 2013. The rare earths and rare metals materials that Molycorp produces are critical inputs in wide variety of existing and emerging applications, including the following: advanced transportation technologies, such as hybrid electric, plug-in hybrid electric, and all-electric vehicles; clean energy technologies, such as solar and wind power systems; energy efficiency technologies, such as high efficiency motors and appliances, compact fluorescent lights, and color displays; computing and communications applications, including fiber optics, lasers, and hard disk drives; defense and aerospace applications, such as satellites, guidance and control systems, and global positioning systems; and advanced water treatment technologies for use in municipal wastewater, industrial wastewater, pool & spa, and outdoor recreation applications. For more information please visit  www.molycorp.com.

SAFE HARBOR STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements that represent Molycorp's beliefs, projections and predictions about future events or Molycorp's future performance. Forward-looking statements can be identified by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause Molycorp's actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements.

Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: the potential need to secure additional capital to implement Molycorp's business plans, and Molycorp's ability to successfully secure any such capital; Molycorp's ability to complete its planned capital projects, such as its initial modernization and expansion efforts, including the accelerated start-up of the Molycorp Mountain Pass facility, which management refers to as Project Phoenix Phase 1, and the second phase capacity expansion plan, which management refers to as Project Phoenix Phase 2, and reach full planned production rates for REO and other planned downstream products, in each case within the projected time frame; the success of Molycorp's cost mitigation efforts in connection with Project Phoenix, which if unsuccessful, might cause its costs to exceed budget; the final costs of Molycorp's planned capital projects, such as Project Phoenix Phase 1 and Project Phoenix Phase 2, which may differ from estimated costs; Molycorp's ability to successfully integrate Neo Material Technologies, Inc. (now Molycorp Canada), with its operations; Molycorp's ability to achieve fully the strategic and financial objectives related to the acquisition of Molycorp Canada, including the acquisition's impact on Molycorp's financial condition and results of operations; and unexpected costs or liabilities that may arise from the acquisition, ownership or operation of Molycorp Canada. Also as a result of the Molycorp Canada acquisition, Molycorp's business performance may be materially affected by a number of other factors and uncertainties including, but not limited to: the rate of exchange of the U.S. dollar to the Canadian dollar, the Japanese yen, and the Chinese Renminbi; new products pricing; the competitive environment for these new products; unexpected actions of domestic and foreign governments; and various events which could disrupt operations, including natural events and other risks. Other risk factors and uncertainties that may cause actual results to differ materially from expected results include: uncertainties associated with Molycorp's reserve estimates and non-reserve deposit information, including estimated mine life and annual production; uncertainties related to feasibility studies that provide estimates of expected or anticipated costs, expenditures and economic returns, REO prices, production costs and other expenses for operations, which are subject to fluctuation; uncertainties regarding global supply and demand for rare earths materials; uncertainties regarding the results of Molycorp's exploratory drilling programs; Molycorp's ability to enter into additional definitive agreements with its customers and its ability to maintain customer relationships; Molycorp's sintered neodymium-iron-boron rare earth magnet joint venture's ability to successfully manufacture magnets within its expected timeframe; Molycorp's ability to successfully integrate other acquired businesses; Molycorp's ability to maintain appropriate relations with unions and employees; Molycorp's ability to successfully implement its “mine-to-magnets” strategy; environmental laws, regulations and permits affecting Molycorp's business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by Molycorp; and uncertainties associated with unanticipated geological conditions related to mining.

For more information regarding these and other risks and uncertainties that Molycorp may face, see the section entitled “Risk Factors” of the Company's Annual Report on Form 10-K for the year ended December 31, 2011 and of the Company's Quarterly Reports on Form 10-Q. Any forward-looking statement contained in this release or the Annual Report on Form 10-K or the Quarterly Reports on Form 10-Q reflects Molycorp's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to Molycorp's operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. Molycorp assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.

Copyright Business Wire 2010

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