Molycorp is up 38% in 2012, but still cheap say analyst

Molycorp’s mould-breaking deal with Neo Material Technologies has sent its shares rocketing and the counter is now up 38% so far this year.

On Thursday the stock was trading at $33.19, down slightly on the day. Molycorp is still down more than 40% over the last 12 months and hit a high of $77 last May.

The Colorado company is in the process of restarting mining and processing at Mountain Pass in California, the largest deposit outside China, with a production target of 40,000 tonnes.

China accounts for more than 90% of rare earth production in the world, but is also the biggest consumer.

The deal with Neo Material gives Molycorp access to advanced rare earth processing capabilities, specifically the Toronto company’s patented magnet technology, and a sales channel into China for the 17 elements.

Bloomberg reports that despite its rocketing share price some analysts see Molycorp (NYSE:MCP) as being undervalued and ripe for a takeover as at a price-future earnings ratio of 3.4 it is “cheaper than nine out of 10 metals and mining companies and a third less than the industry median”:

“Molycorp’s cheap,” Scott Goginsky, a research analyst and money manager at Milford, Pennsylvania-based Biondo Investment Advisors LLC, which oversees $450 million and owns shares of Molycorp, said in a telephone interview. Being able to make magnets on its own “does help cushion some of the price concerns out there. It’s not just a commodity,” he said.