Despite these factors, the company's near-term future was once again brought into question last week when its shares plummeted on the back of confirmation that its 2013 revenue will come in lower than previously expected. That's the result of a drop in selling prices and a delay in achieving full production at its California processing plant.

In a press release, Molycorp noted that all key production components of its new manufacturing complex at the Mountain Pass mine are operational and that the facility has begun ramping up to its full-scale “Phase 1” run rate. However, concerns mounted when it added it will not proceed with the next planned phase of development until it sees an improvement in rare earth demand and prices, in addition to easier access to capital.

As much risk as opportunity

In a market rife with rumors, there will never be a shortage of both bears and bulls, but investors will do well to realize that Molycorp is far from the finished product. It is still developing its mine, has not proven capable of producing heavy rare earths and is still experimenting with a new processing technology. In other words, the stock presents as much risk as it does opportunity.

At the same time, if prices are to rebound, the company remains uniquely poised to ride a wave of opportunity. The fact remains that this project boasts astounding potential, and while investors focused on the short term may be against Molycorp's decision to hold back on its second phase of development, its willingness to hold out for a more attractive market environment is a plus for long-term investors.


Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.

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