Molycorp to Move Its Mountain Pass Rare Earth Facility to ‘Care and Maintenance’ Mode
August 26, 2015 (Source: Globe Newswire) — Rare Earth Magnetic Materials Customers Will Not be Impacted;
Via Its Production Facilities in Estonia and China
– Depressed Rare Earth Pricing a Key Factor in Decision to Suspend Production
Molycorp, Inc. (OTC:MCPIQ) (“Molycorp” or the “Company”) announced today that it will transition its Mountain Pass Rare Earth Facility to a “care and maintenance” mode while it plans to continue serving its rare earth oxide customers via its production facilities in Estonia and China. Customers of the Company’s rare earth magnetic materials, as well as its rare earth-based water treatment products, will not be impacted.
Rare earth production at the Mountain Pass facility will be suspended no later than October 20, 2015, and the site, including idled machinery and equipment, will be maintained to ensure it remains in a safe and stable condition, and that government regulatory commitments can be met.
Rare earth pricing, which has declined dramatically over the past four years, was a key factor in the decision to suspend rare earth production at Mountain Pass, Company officials said.
Molycorp is being advised by the investment banking firm of Miller Buckfire & Co. and is receiving financial advice from AlixPartners, LLP. Jones Day and Young, Conaway, Stargatt & Taylor LLP act as legal counsel to the Company in this process.
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About Molycorp, Inc.
Molycorp is the only advanced material manufacturer in the world that both controls a world-class rare earth resource and can produce high-purity, custom engineered rare earth products to meet increasingly demanding customer specifications. With production facilities on three continents, the Company produces a wide variety of specialized products from rare earth elements and five rare metals (Gallium, Indium, Rhenium, Tantalum and Niobium). The Company produces rare earth magnetic materials through its Molycorp Magnequench subsidiary, including neodymium-iron-boron (NdFeB) magnet powders, used to manufacture bonded NdFeB permanent rare earth magnets. The Company also markets and sells a line of rare earth-based water treatment products.
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. No representations or warranties (express or implied) are made as to the accuracy of any forward-looking statements, including any estimates or projections.
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 successfully restructure its debt and reorganize its businesses under Chapter 11 of the United States Bankruptcy Code, which we refer to as the Chapter 11 Cases; Molycorp’s ability to secure confirmation of a proposed reorganization plan under the Chapter 11 Cases; Molycorp’s ability to meet its obligations under its secured debtor-in-possession credit agreement entered into as part of the Chapter 11 Cases; Molycorp’s ability to develop and implement a plan to place its Mountain Pass rare earth mine and processing facility, which we refer to as the Mountain Pass facility, into care and maintenance; Molycorp’s ability meet the standards necessary to maintain its listing on a stock exchange, including its ability to cure any non-compliance with such listing standards; the need to secure additional capital to implement Molycorp’s business plans and emerge from the Chapter 11 Cases, and Molycorp’s ability to successfully secure any such capital; Molycorp’s ability to make interest payments on its existing debt; Molycorp’s ability to repay its debt, whether at maturity, pursuant to any acceleration, or otherwise; Molycorp’s ability to develop internal and external demand for rare earth oxides, which we refer to as REO, and other downstream products, including the ability to operate at commercial production rates and competitive cash production costs, in each case within the projected time frame; the success of Molycorp’s cost mitigation efforts in connection with placing the Mountain Pass facility into care and maintenance, which, if unsuccessful, might cause its costs to exceed the budget prepared in connection with the Chapter 11 Cases; the final costs of Molycorp’s planned capital projects for its downstream businesses, which may differ from estimated costs; Molycorp’s ability to achieve fully the strategic and financial objectives related to the restructure of its debt and the reorganization of its businesses in connection with the Chapter 11 Cases; risks and uncertainties associated with intangible assets, including any future goodwill impairment charges and the ability to develop and protect intellectual property related to products and operations; risks associated with Molycorp’s ability to protect its intellectual property, including the infringement of intellectual property of third parties; market conditions, including prices and demand for Molycorp’s products; Molycorp’s ability to control its working capital needs; foreign exchange rate fluctuations; the development and commercialization of new products; unexpected actions of domestic and foreign governments; various events which could disrupt operations, including natural events and other risks; unexpected delays adversely affecting delivery of feedstock and finished goods resulting from damage or destruction of transportation systems upon which Molycorp and its affiliates rely; uncertainties associated with Molycorp’s reserve estimates and non-reserve deposit information, including estimated mine life and annual production; uncertainties related to feasibility and other studies that provide estimates of expected or anticipated costs, expenditures and economic returns, REO prices, production costs and other expenses for operations, which are subject to fluctuation; uncertainties regarding global supply and demand for rare earths materials; uncertainties regarding the results of Molycorp’s exploration programs; Molycorp’s ability to enter into definitive agreements with its customers, its ability to supply such customers, and its ability to maintain customer relationships; Molycorp’s ability to maintain appropriate relations with unions and employees; Molycorp’s ability to attract and retain employees with the necessary experience, skills and training; Molycorp’s ability to successfully operate its businesses, including the implementation of a care and maintenance plan for the Mountain Pass facility; 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; and the outcome of the current stockholder class action litigation and derivative litigation, including any actions taken by government agencies in connection therewith.
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, 2014 and of the Company’s Quarterly Reports on Form 10-Q. Any forward-looking statement contained in this release or the Annual Report on Form 10-K or the Quarterly Reports on Form 10-Q reflects Molycorp’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to Molycorp’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. 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.
Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>