Molycorp, Fully Funded, Breaks off Discussions with Sumitomo Corporation
Molycorp, Inc. (NYSE: MCP), the Western hemisphere's only producer of
rare earth oxides (REO) and the largest REO producer outside of China,
announced today that it has agreed with Japanese trading house Sumitomo
Corporation to break off discussions over Sumitomo′s potential
investment in Molycorp. Molycorp's capital investment needs have been
filled, and since it is now producing significant revenue from sales to
customers around the world, including Japan, Sumitomo′s investment is
not necessary for implementation of Molycorp′s business plan.
'We are now fully funded for both Phase 1 and Phase 2 of our $781
million expansion and modernization of our flagship rare earth mine and
manufacturing facility at Mountain Pass, and we are generating
significant operating revenue from sales of product to customers around
the world, including those in Japan. Thus, the original investment in
Molycorp that Sumitomo offered is no longer a critical need,' said Mark
A. Smith, President and CEO of Molycorp. 'The conditions under which the
original deal was structured shifted substantially, and in a way that
did not offer sufficient value to both Molycorp and Sumitomo′s
shareholders. That is why we have mutually agreed to end our
discussions.'
Sumitomo's original offer was to make a one-time $100 million equity
investment in Molycorp and provide Molycorp with a low-interest, $30
million loan, contingent on certain commitments being received from
Sumitomo′s potential customers. A substantial part of the funding for
the investment was to come from the Japanese Government. However,
Sumitomo was later forced to split the investment package into two
investments of $50 million, while also requesting discounted pricing for
Molycorp's rare earth products in order to line up commitments from
Sumitomo′s potential customers.
'We have very high regard for our friends and colleagues at Sumitomo,
and we remain unshakably committed to serving the Japanese market, which
is Molycorp's largest market,' said Smith. 'However, high market demand
for our products requires that we focus on other customers at this time.'
About Molycorp, Inc.
With offices in the U.S., Europe, and Japan, Molycorp, Inc. is the only
rare earth oxide (REO) producer in the Western Hemisphere and the
largest REO producer outside of China. In addition to its current
production of rare earth oxides at its flagship rare earth mine and
processing facility at Mountain Pass, California, the Company produces
rare earth metals, rare earth alloys (such as neodymium-iron-boron and
samarium-cobolt alloys) and rare metals such as niobium and tantalum.
The rare earths and rare metals Molycorp produces are critical inputs in
existing and emerging applications including: clean energy technologies,
such as hybrid and electric vehicles and wind power turbines; multiple
high-tech uses, including fiber optics, lasers and hard disk drives;
numerous defense applications, such as guidance and control systems and
global positioning systems; advanced water treatment technology for use
in industrial, military and outdoor recreation applications; and other
technologies. For more information please visit ?www.molycorp.com.
Molycorp, Inc.
Jim Sims, +1 303-843-8062
Vice President
Corporate Communications
Jim.Sims@Molycorp.com
or
Brian
Blackman, +1 303-843-8067
Senior Manager, Investor Relations
Brian.Blackman@Molycorp.com