GREENWOOD VILLAGE, Colo. & TALLINN, Estonia--(BUSINESS WIRE)--Molycorp, Inc. (NYSE: MCP) today announced that its wholly owned subsidiary Molycorp Minerals, LLC (Molycorp) has completed the acquisition of a 90.023% controlling stake in AS Silmet, one of only two rare earth processing facilities in Europe, in a transaction valued at approximately $89 million. Molycorp acquired 80% of the outstanding shares of AS Silmet from AS Silmet Grupp, which will retain a 9.977% ownership interest going forward. Molycorp acquired the other 10.023% from Treibacher Industrie AG.
The acquisition provides Molycorp with its first European base of operations as well as doubles the company’s current rare earth production capacity from approximately 3,000 tonnes per year of rare earth oxide (REO) equivalent to 6,000 tonnes. AS Silmet will immediately begin sourcing rare earth feed stocks for production of its products from Molycorp’s Mountain Pass, California rare earth mine and processing facility, making it the first rare earth oxide and metal producer in Europe that is not dependent on rare earth materials sourced from China. As part of the transaction, the company also will change its name to AS Molycorp Silmet.
The facility’s main focus will be on the production of rare earth oxides and metals -- including didymium metal, a critical component in the manufacture of neodymium-iron-boron permanent rare earth magnets -- from feed stocks supplied by Molycorp’s Mountain Pass, California rare earth mine and processing facility. However, the transaction also expands Molycorp’s manufacturing capabilities beyond rare earths into the production of the rare metals niobium and tantalum, which between them have a wide variety of uses in electronics, materials manufacture, optics, health care, chemical process equipment, power generation systems, aerospace, superconductive materials, and others. AS Silmet is one of the world’s leading producers of pure niobium and tantalum metal.
AS Silmet’s manufacturing operation, which employs approximately 550 workers, is located in Sillamäe, Estonia. The company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.
“This acquisition provides Molycorp with a European base of operations as well as a larger global customer base, greater rare earth production capacity, and an expanded product line that extends our interests into other strategic metals and technologies,” said Mark A. Smith, President and CEO of Molycorp, Inc. “We have already begun shipping feed stocks from Mountain Pass to be processed into finished products at AS Molycorp Silmet. In the short-term, this will greatly increase our ability to supply our products into the increasingly tight global rare earth market and provide a convenient base from which to supply European customers. In the mid- and long-term, AS Molycorp Silmet will help us expand our manufacturing capabilities to a broader range of strategic materials."
"We are very excited to be adding the 550 very talented employees of AS Silmet to the Molycorp family," Smith added, "and especially to gain the talents, skills, and experience of David O'Brock, AS Silmet's Managing Director. David has delivered great value to the company and will be an important asset going forward to AS Molycorp Silmet and to our overall growth strategies."
Mr. Tiit Vähi, former Estonian Prime Minister and Chairman of the Board of AS Silmet Grupp, said: “We are very pleased that Molycorp has acquired a majority position in AS Silmet and look forward to the value that Molycorp will bring to the company by providing a steady and secure supply of rare earth feed stocks to the business. This is a strategic advantage that only Molycorp can bring."
CONFERENCE CALL WITH MOLYCORP PRESIDENT AND CEO MARK SMITH AT 9 A.M. EASTERN
Molycorp will host a conference call featuring President and Chief Executive Officer Mark Smith today at 9 a.m. Eastern to discuss this acquisition. Investors and others interested in participating in the live call from within the USA should dial +1 (888) 542-0999 and reference confirmation number 7229211. Those calling from outside the USA should dial +1 (719) 325-2299 and use the same confirmation number. A telephone replay will be available beginning at approximately 12:00 noon Eastern today through Sunday, April 24, 2011, by dialing +1 (877) 870-5176 from the U.S., or +1 (858) 384-5517 from international locations, and entering passcode: 7229211. There will also be a simultaneous live audio webcast available on the Investor Relations section of the Company's website at www.molycorp.com. The webcast will be archived on the website for 365 days.
Colorado-based Molycorp, Inc. is the only REO producer in the Western Hemisphere and currently produces approximately 3,000 metric tons of commercial rare earth materials per year. Following the execution of Molycorp's "mine-to-magnets" strategy and the expected 2012 completion of Phase 1 of its modernization and expansion efforts at its Mountain Pass, California processing facility, Molycorp expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year. The Company expects to achieve an annual production capacity by the end of 2013 of approximately 40,000 metric tons of REO equivalent per year after the completion of Phase 2. Molycorp intends to provide to the market a range of rare earth products, including high-purity oxides, metals, alloys, and permanent magnets.
About AS Silmet
Estonia-based AS Silmet is one of the biggest rare metal and rare earth metal producers in Europe. Manufacturing at AS Silmet includes three factories that conduct rare earth metals separation; rare metals production; and metallurgical operations. AS Silmet produces up to 3,000 tonnes rare earth products and 700 tonnes of rare metal products annually. The company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.
This press release contains forward-looking statements that represent the Company’s beliefs, projections and predictions about future events or its future performance. You can identify forward-looking statements 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 the Company’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 Company's ability to effectively assimilate AS Silmet into its overall operations; the Company’s ability to secure sufficient capital to implement its business plans; the Company’s ability to complete its Phase 1 modernization and expansion efforts and Phase 2 expansion efforts and reach planned production rates for REOs and other planned downstream products; uncertainties associated with the Company’s reserve estimates and non-reserve deposit information; uncertainties regarding global supply and demand for rare earth materials; the Company’s ability to maintain appropriate relations with unions and employees; the Company’s ability to successfully implement its "mine-to-magnets" strategy; environmental laws, regulations and permits affecting the Company’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 the Company; uncertainties associated with unanticipated geological conditions related to mining; and other risks discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2010, which filings are available from the SEC.
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