GREENWOOD VILLAGE, Colorado, Saturday, December 11th 2010 [ME NewsWire]:
(BUSINESS WIRE)-- Molycorp, Inc. (NYSE: MCP) today announced that it has entered into a Memorandum of Understanding (MOU) with Sumitomo Corporation pursuant to which Sumitomo will assemble an equity and debt financing package in the aggregate amount of $130 million for Molycorp’s use in completing its rare earth “Mine-to-Magnets” manufacturing supply chain. In exchange, Molycorp will provide Sumitomo with substantial quantities of several rare earth products over the next seven years.
Pursuant to the transactions contemplated by the MOU, Sumitomo will purchase $100 million of Molycorp common stock and provide Molycorp $30 million in debt financing at a low interest rate. Sumitomo is seeking financial support from the Japan Oil, Gas and Metals National Corporation (JOGMEC), a Japanese government entity, in connection with this effort. The transactions contemplated by the MOU are subject to finalization of definitive agreements and the financing transactions are expected to close in February 2011.
Molycorp is expected to provide Sumitomo with approximately 2,500 metric tons per year of cerium- and lanthanum-based products and 250 metric tons of didymium oxide (a combination of neodymium and praseodymium) per year from its current production facility at Mountain Pass, California. Following completion of its new, state-of-the-art rare earth processing facility at Mountain Pass, Molycorp will provide to Sumitomo for an additional five years approximately 3,000 metric tons of cerium- and lanthanum-based products per year and 250 metric tons of didymium oxide per year.
“We are very pleased to have entered into the Memorandum of Understanding with Sumitomo,” said Mark Smith, Molycorp’s Chief Executive Officer. “This financing will help to ensure that Molycorp will deploy its entire mine-to-magnets manufacturing supply chain on time and on budget.”
“The Memorandum of Understanding underscores our high level of confidence in Molycorp’s ability to execute its ‘mine-to-magnets’ business strategy and to provide competitive and stable sources of high-quality rare earth products for many years to come,” said Rei Ito, General Manager of Sumitomo’s Inorganic Chemicals & Industrial Minerals Department.
About Molycorp
Colorado-based Molycorp, Inc. is the only rare earth oxide, or 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 completion of its modernization and expansion efforts at its Mountain Pass, California processing facility by the end of 2012, Molycorp expects to produce at a rate of approximately 20,000 metric tons of REO equivalent per year and intends to offer a range of rare earth products, including high-purity oxides, metals, alloys, and permanent magnets.
This press release contains forward-looking statements that represent Molycorp’s (“Company”) 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 enter into definitive agreements for the transactions contemplated by the Memorandum of Understanding, including within the anticipated timeframe; the Company’s ability to secure sufficient capital to implement its business plans; the Company’s ability to complete its modernization and expansion efforts and reach full 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 September 30, 2010, which filings are available from the SEC.
Any forward-looking statement you read in this press release reflects the Company’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to the Company’s operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. The Company 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.
For media enquiries, please contact:
Molycorp Company Contact:
Jim Sims
Director of Public Affairs
+1 (303) 843-8067
Jim.Sims@Molycorp.com
Molycorp Investor Relations:
ICR, Inc.
Gary T. Dvorchak, CFA ICR, LLC
Senior Vice President
+1 310-954-1123
Gary.Dvorchak@icrinc.com
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