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Stock of rare earth miner Molycorp (NYSE: MCP) rocketed 44% on Monday after first quarter production numbers provided a pleasant surprise to the Colorado company’s long-suffering investors.
Molycorp is a speculators’ favourite and Monday saw more than 9 million shares (out of a free float of just over 190 million) changing hands with the counter hitting a day high of $0.50 a share before settling back $0.47 at the close, up 43.9%.
Molycorp announced fourth quarter rare earth production at its Mountain Pass, California facility rose 28% compared to the same period in 2013 and nearly doubled from the previous quarter.
According to Molycorp Mountain Pass completed Q4 with 1,328 tonnes of rare earth oxide equivalent production compared to 1,034 mt in the year-ago quarter and 691 mt in Q3 2014 adding that per-unit cash production costs also declined sequentially.
Full year 2014 production totaled 4,785 mt, compared to 3,473 mt in 2013. Per-unit cash production costs at Mountain Pass also declined sequentially in Q4 of 2014, according to the company.
Molycorp said the higher production volumes expected at Mountain Pass in 2015 should coincide with relatively strong demand it is seeing for its rare earth products – magnetic rare earth material neodymium/praseodymium, lanthanum, and its light rare earth concentrate.
Molycorp processes the light rare earth concentrate at its own processing facilities into a variety of engineered materials, including rare earth magnetic materials for multiple downstream markets and vehicle emissions catalysts that consume cerium and other materials.
Geoff Bedford, President and CEO said: “Rare earth pricing softened in Q4 with market uncertainty surrounding release of final details of China’s ongoing reforms to rare earth mining, separation, and export regulatory policies. However, given the relatively strong internal and external demand we are seeing for many Mountain Pass products, continuing to boost production there is a top operational priority.”
Once the largest supplier of rare earths anywhere in the world, Mountain Pass was mothballed in 2002, but a surge in the price of the 17 elements following the imposition of export limits in China led to Project Phoenix to restart operations with private equity money.
Once dubbed “one of the greatest private equity deals ever” the slide in price of REEs, particularly the light variety found at Mountain Pass, since late 2012 coupled with delays in ramp-up at the mine led some to speculate the company could fall into bankruptcy.
While today’s move higher is certainly welcome for holders of the counter, MCP remains down nearly 47% so far this year and nowhere near its heyday: After listing in 2010 Molycorp peaked at a whopping $6.4 billion valuation in May 2011. After today surge it’s still only worth $115 million.
