Molycorp Announces Completion of Capital Raise for Its $781 Million Rare Earth Expansion and Modernization Project

Molycorp CEO: "Project Phoenix is Now Fully Funded and We Remain On Time and On Budget"

GREENWOOD VILLAGE, Colo.--()--Molycorp, Inc. (NYSE: MCP), the Western hemisphere's only producer of rare earth oxides, today announced that it has secured the final funds necessary for the capital build out of its estimated $781 million expansion and modernization project at its flagship rare earth facility at Mountain Pass, California with the completion of an offering of $230 million aggregate principal amount of 3.25% Convertible Senior Notes due 2016. Full funding of the capital plan of Project Phoenix is a major milestone in Molycorp's overall rare earth 'mine-to-magnets' business plan.

When Phase 1 of Project Phoenix is completed, which is expected to occur next year, Molycorp's manufacturing assets will comprise the world's first fully integrated rare earth manufacturing supply chain, producing high-purity rare earth oxides, metals, alloys, and neodymium-iron-boron (NdFeB) permanent magnets, widely used in transportation, high tech, clean energy, defense, and other industries.

"Project Phoenix is now fully funded, and we remain on time and on budget for both Phase 1 and Phase 2 of this estimated $781 million expansion and modernization project," said Mark A. Smith, President and Chief Executive Officer of Molycorp, Inc. "Beginning next year, we expect to significantly ramp up production of 10 different high-purity rare earth oxides — light and heavy rare earths — as well as a variety of rare earth metals, alloys, and permanent rare earth magnets. We also remain on track to emerge as the world's lowest-cost manufacturer of rare earth oxides, which will be a particularly powerful growth driver for our downstream manufacturing operations."

"Our high-grade resource, our proprietary low-cost materials processing technology, and our ability to capture high margins through vertical integration puts Molycorp in a strong position to capitalize on growth in global rare earth demand and increasingly tight markets for these critical materials," Smith said. "In addition, recent acquisitions have enabled us to manufacture rare earth metals and neodymium-iron-boron and samarium-cobalt alloys, which has moved us closer to realizing our full 'mine-to-magnets' business plan."

"We expect that more forward integration opportunities will arise from time to time, and the company intends to be fully capitalized to take advantage of any such opportunities," Smith added.

Final capital funding of Project Phoenix was achieved through the successful closing on June 15, 2011, of an offering of $230 million aggregate principal amount of Molycorp’s 3.25% Convertible Senior Notes due 2016 (the “Notes”) in an offering exempt from the registration requirements of the Securities Act of 1933, which includes an additional $30 million aggregate principal amount of Notes sold pursuant to the initial purchasers’ option to purchase additional Notes. The Convertible Senior Notes are Molycorp’s senior unsecured obligations and will bear interest at a rate of 3.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2011. The Notes will be convertible at any time into shares of Molycorp’s common stock, cash, or a combination thereof, at Molycorp’s election. The conversion rate will initially be 14.0056 shares of Molycorp common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $71.40 per share of Molycorp’s common stock), subject to customary adjustments. The Notes will mature on June 15, 2016, unless earlier repurchased or converted in accordance with their terms prior to that date. Molycorp will not have the right to redeem the Notes prior to maturity.

The estimated capital expenditures for Project Phoenix do not include annual corporate, selling, general and administrative expenses, as well as the Company’s working capital requirements, which the Company expects to fund from cash from operations and/or other sources of capital.

Molycorp also announced the closing of a secondary public offering of 11,500,000 shares of Molycorp’s common stock at a price per share of $51.00 by certain selling stockholders, which includes an additional 1,500,000 shares of common stock sold pursuant to the underwriters’ option to purchase additional shares.

About Molycorp

Colorado-based Molycorp, Inc. is the only REO producer in the Western Hemisphere and currently produces more than 3,000 metric tons of commercial rare earth materials per year. In addition to its flagship rare earth mine and processing facility at Mountain Pass, California, Molycorp also owns a controlling interest in the Estonia-based Molycorp Silmet AS, which has a production capacity of 3,000 metric tons of rare earth products and 700 metric tons of rare metal products annually and is one of the largest rare metal and rare earth metal producers in Europe. Additionally, Molycorp owns and operates Arizona-based Molycorp Metals and Alloys, one of the leading producers of high-purity rare earth alloys and metals outside of China. 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, the Company expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year from Mountain Pass. The Company expects to achieve an annual production capacity at Mountain Pass 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. The Company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous nations of the Soviet Union.

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: Molycorp’s ability to secure sufficient capital to implement its business plans; Molycorp’s ability to complete its Phase 1 modernization and expansion efforts and Phase 2 expansion efforts and reach full planned production rates for REOs and other planned downstream products; the final costs of the Phase 1 modernization and expansion plan and Phase 2 expansion, which may differ from estimated costs; uncertainties associated with Molycorp’s reserve estimates and non-reserve deposit information; uncertainties regarding global supply and demand for rare earths materials; Molycorp’s ability to successfully integrate recently acquired businesses; Molycorp’s ability to reach definitive agreements for a joint venture to manufacture neodymium-iron-boron permanent rare earth magnets and its supply and financing arrangement with Sumitomo; 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, 2010 filed with the SEC. Any forward-looking statement contained in this press release or the Annual Report on Form 10-K reflects Molycorp’s current views with respect to future events and 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.

Contacts

Molycorp Inc.
Jim Sims, +1 303-843-8067
Director of Communications
Jim.Sims@Molycorp.com
or
Investor Relations
ICR, LLC
Gary T. Dvorchak, CFA, +1 310-954-1123
Senior Vice President
Gary.Dvorchak@icrinc.com

Sharing

Contacts

Molycorp Inc.
Jim Sims, +1 303-843-8067
Director of Communications
Jim.Sims@Molycorp.com
or
Investor Relations
ICR, LLC
Gary T. Dvorchak, CFA, +1 310-954-1123
Senior Vice President
Gary.Dvorchak@icrinc.com